Wednesday, March 3, 2021

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IMF Ready To Bailout Pakistan, But CPEC Deals Will Be Scrutinized

Pakistan’s request for an International Monetary Fund (IMF) bailout package will be scrutinized as part of the reason that Pakistan found itself in this situation is Chinese debt due to CPEC project. This was stated by US State Department spokesperson Heather Nauert. 

“I think part of the reason that Islamabad found itself in this situation is Chinese debt and the fact that there is debt that governments have incurred that they may be thought wouldn’t be so tough to bail themselves out of but has become increasingly tough.”

Nauert identified loans Islamabad has taken from Beijing to fund the China-Pakistan Economic Corridor (CPEC) as the reason for its current financial trouble.

Earlier in the year, Pompeo warned any IMF bailout packages given to Pakistan should not be used to pay off Chinese debts. After a visit to the country in September, however, he had eased his stance and assured Pakistan that Washington would not try to block any requests to the IMF for a bailout.

IMF Managing Director Christine Lagarde on Thursday announced that she would send a mission to Pakistan for bailout negotiations amid emphasis on full disclosure of the debt Pakistan has acquired including from China.

“An IMF team will visit Islamabad in the coming weeks to initiate discussions for a possible IMF-supported economic programme,” Lagarde said, adding that the Fund was looking forward to a continuing partnership.

Both Pakistan and the IMF have already covered significant ground during a week-long staff-level visit of an IMF team to Pakistan that ended last week. However, some perplexing issues remained to be solved including the extent of new measures and disclosure of details of China-Pakistan Economic Corridor (CPEC) projects.

The IMF has already made clear what it expects from Islamabad in return for extending a loan. “Policies should include more exchange rate flexibility and monetary policy tightening, further fiscal adjustment, strengthening the performance of key public enterprises together with further increases in gas and power tariffs,” said a statement the IMF issued earlier.

More News at EurAsian Times

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