US wants Pakistan to away from China through IMF

Islamabad, Oct 13, IRNA - US State Department spokesperson Heather Nauert’s statement that Pakistan is in difficult economic situation because of Chinese debt clearly shows that the US wants Pakistan to stay away from China though International Monetary Fund (IMF).

Nauert added that Pakistan’s request for an International Monetary Fund (IMF) bailout package will be closely examined.

Pakistan, Finance Minister Asad Umar announced that the government had made the 'difficult decision' to approach the IMF for a bailout to address the mounting balance of payments crisis faced by Pakistan.

Pakistan is seeking its largest loan package of up to $8 billion from the International Monetary Fund (IMF).

Report quoting sources say the IMF could place strict conditionalities, forcing Pakistan to seek additional loans for meeting those restrictions and this could expand the loan facility to $12bn.

The announcement followed the highest single-day loss in a decade in the stock market, which plunged by over 1,300 points, losing almost Rs270bn of its capitalization.

Pakistan has received more than a dozen financial support packages from the IMF in the past. It completed the last three-year package of $6.4bn in August 2016, which was 216 percent of Pakistan’s quota at the IMF.

US State Department spokesperson has recently identified loans Pakistan has taken from China to fund the China-Pakistan Economic Corridor (CPEC) as the reason for its current financial trouble while speaking to media during a state department press briefing.

China has made Pakistan a flagship country in its vast Belt and Road infrastructure building program, pledging about $60 billion for CPEC which the US is opposing.

Senior analyst and former professor of Internal Relations at University of Punjab Dr. Rashid Ahmad Khan talking to IRNA said the US is worried about the growing Chinese influence in the region.

“The Americans don’t want China to reach Indian Ocean which has now become a very important commercial route for Middle Eastern gas and oil and other kind of merchandize between Europe and South East Asia,” he noted.

The analyst said that for past many years this area has been under the hegemony of western powers.

Dr. Rashid Ahmad Khan added that as very important strategic economic interests of the US lie in this area therefore it is trying to prevent the Chinese influence in this region.

He said this is the main reason that the US has taken a stand against CPEC. “Through CPEC, China would get a foothold in a very important part of the Indian Ocean which is not acceptable to the US,” said the expert.

He said that now when Pakistan is planning to approach the IMF the US has started making statements against Pakistan’s Chinese loans. The analyst viewed that the US wants Pakistan to stay away from China though the IMF.

Dr. Rashid Ahmad Khan noted that the IMF is in a position to provide Pakistan with cash that is why the US is trying to put pressure on Pakistan against the CPEC.

He said that Chinese are investing money under the CPEC projects they are not providing Pakistan hard cash and this is what the US is trying to exploit.

Addressing a news conference at the IMF and World Bank annual meetings in Bali, the IMF’s Maurice Obstfeld cautioned that increased Chinese involvement in Pakistan’s economy could bring both benefits and risks.

Earlier in the year, US Secretary of State Mike Pompeo had 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.

Chinese officials have rejected criticism that the China-Pakistan Economic Corridor projects have burdened Pakistan with unsustainable debts. Instead, the Chinese maintain, they have boosted the country’s economic growth and provided 70,000 jobs.

IMF Managing Director Christine Lagarde has 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.

In a cabinet meeting, Prime Minister Imran Khan had instructed the finance ministry to provide a detailed analysis of utilisation of Rs24 trillion worth of debt that the country acquired from 2008 to 2018.

Finance ministry sources said the IMF demanded depreciation of the rupee by over 20% and increase in key interest rate to 12.5%.

According to data released last week, State Bank of Pakistan’s reserves suffered one of their sharpest drops, hitting its lowest level in four years following a decline of $627.7 million to $8.4 billion during the week ending September 28 due to external debt servicing.

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