Pakistan is set to discuss the Chinese debt details with the United States before briefing the International Monetary Fund about the Beijing loans as Islamabad awaits an IMF bailout package, official sources said on Sunday.
Senior government officials told The Nation that Washington had not given any positive signals since Pakistan approached the IMF for the bailout package this month.
One official said: “We will provide details to the US about the China loans. There is nothing to hide. All details are already available on media.”
Another official said: “Washington is very influential in the IMF so it is necessary to satisfy them (the US) before the IMF visits Pakistan. We will also share details with the IMF later. As of now, we are awaiting a positive signal from the US.”
Over the weekend, Finance Minister Asad Umar dismissed the US statements on Pakistan’s debt position before evaluating Islamabad’s request for an IMF bailout.
After returning from Indonesia, where he attended the annual meetings of the World Bank and IMF, Umar said the US did not hold the power to veto IMF decisions.
However, the US is the largest contributor to the IMF and has 17.68 percent of voting rights in major decisions. China is third, behind Japan, and controls 6.49 percent of the vote.
Washington had earlier said it will examine closely Pakistan’s request for an IMF loan, adding that “part of the reason that Pakistan found itself in this situation is Chinese debt”.
Asked at a news briefing how Washington would deal with Pakistan’s request, State Department spokesperson Heather Nauert said: “In all cases, we examine that closely from all angles of it, including Pakistan’s debt position, in evaluating any type of loan programme.”
In July, Secretary of State Mike Pompeo had indicated that the US will review the bailout package in view of the massive Chinese debt on Pakistan.
“Make no mistake. We will be watching what the IMF does. There is no rationale for IMF tax dollars, and associated with that American dollars that are part of the IMF funding, for those to go to bail out Chinese bondholders or China itself,” Pompeo said.
Recently, the US military said it had made a decision to cancel $ 300 million in aid to Pakistan that had been suspended over Islamabad’s perceived failure to take decisive action against militants.
The so-called Coalition Support Funds were part of a broader suspension in aid to Pakistan announced by President Donald Trump at the start of the year, when he accused Pakistan of rewarding past assistance with “nothing but lies and deceit.”
The Trump administration alleged Islamabad was granting safe haven to insurgents who are waging a 17-year-old war in neighboring Afghanistan, a charge Pakistan denies.
US Defence Secretary Jim Mattis, in particular, had an opportunity to authorize $300 million in CSF funds through this summer – if he saw concrete Pakistani actions to go after insurgents, but he chose not to do so.
But last week there was improvement in ties as Pakistan pledged to support negotiations with the Taliban to end Afghanistan’s 17-year war and asked the US to restore military aid.
Foreign Minister Shah Mehmood Qureshi said he found Secretary of State Mike Pompeo “ready to listen” to Pakistan and said he was returning to Islamabad “slightly more hopeful” than before.
Asad Umar aid Pakistan was ready to share details of the debt related to the China-Pakistan Economic Corridor with the IMF.
Last day, former planning minister Ahsan Iqbal rejected the US statement that huge Chinese debt trap was responsible for Pakistan’s current economic challenges.
The Pakistan Muslim League (Nawaz) leader, who remained the focal person on China-Pakistan Economic Corridor, said that the payment of Chinese loan shall begin after 2022 and that will not be more than $ 2 billion per annum so “it is wrong to blame Beijing deals for the economic mess.”
A delegation of the IMF would visit Pakistan on November 7 to finalize terms and conditions for a bailout programme.
The Institute of International Finance in its latest report said a potential IMF programme for Pakistan could be valued at $15 billion. The IIF expects an agreement on a three-year IMF programme of $15 billion by end of this year.
The rupee’s 24 percent depreciation since end of 2017 may have eliminated most of the overvaluation, the institute stated. Fiscal adjustment, monetary tightening, and a greater exchange rate flexibility will be integral to the new programme, it said.
Diplomatic sources said China does not have any objection to Pakistan’s plan to share the details of Beijing’s loans with the US or IMF. “This is their (Pakistan’s) issue. We will only intervene when we are addressed directly. Our loans (to Pakistan) are not a secret,” said a diplomat.
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