LONDON/ISLAMABAD - The possibility of a political stalemate in Pakistan leading to delays in both reforms and crucial foreign funding has sparked a selloff in its international bonds and fuelled analysts' fears of further economic misery for the country.
"But most important is credibility of elections and legitimacy of the government - any government which lacks credibility will not be able deliver on much needed reforms." Doing so would secure it a final US$1.1 billion tranche before the current IMF programme expires in mid-April - with the government then having to secure a follow-up programme straightaway.
China is a major creditor for Pakistan and has in recent times rolled over loans to the country, as have the United Arab Emirates and Saudi Arabia. Should the unrest and demonstrations that Pakistan witnessed in the run up to the election continue, this would also have an impact on the economy, said Mr Joe Delvaux, a portfolio manager at Amundi, whose firm is invested in Pakistan bonds.