ISLAMABAD: Pakistan hit back at US fears that any IMF bailout its new government might have to seek would be used to repay Chinese loans, stating that it was “totally wrong” to link the two.
Abdullah Hussain Haroon, the caretaker foreign minister, said that a new government led by Imran Khan, who won the country´s general election last week, would have to decide whether to approach the International Monetary Fund (IMF) amid fears of a balance of payments crisis.
However he also dismissed as “inappropriate” comments by US Secretary of State Mike Pompeo earlier this week voicing concerns over any IMF bailout being used to repay Chinese loans to Islamabad.
Analysts have predicted that Pakistan, which is running down its foreign reserves and devaluing its currency in a bid to bridge a yawning trade deficit, will need to seek help urgently – either from a friendly country, or by going to the IMF for its second bailout in five years.
The new government will have “limited time” to act, Fitch ratings agency said this month.
But on Monday Pompeo voiced concerns about any IMF bailout for Islamabad, telling US television station CNBC: “There´s 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 — or China itself.”
The US is one of the Washington-based IMF´s largest donors.
The concerns centre on Beijing´s ambitious $62 billion dollar infrastructure project – the China-Pakistan Economic Corridor (CPEC) – linking its western province of Xinjiang to the Arabian Sea via Pakistan.