Financial Institutions

[The donor pledges Pakistan has received for post-flood recovery,] are specific and long-term and should go toward rebuilding the areas and lives devastated by the summer’s floods — not shoring up foreign reserves. Pakistan’s reserves have been at a precarious position since before the floods and are teetering at around one month’s imports again. [Inflationary pressures, the fallout of Russia’s war in Ukraine and the floods have combined to create] perhaps the greatest economic challenge Pakistan has ever seen. I think Pakistan will ultimately avoid default for now, largely through help from the IMF and loans from friendly countries like Saudi Arabia and China, but those won’t address the clear underlying malaise of the economy.