Pakistan on Wednesday dismissed United States’ concerns that any new International Monetary Fund (IMF) bailout for the South Asian nation would be used to repay Chinese debt, labeling the Reuters report as “totally wrong”.
Pakistan’s economy has hit turbulence over the past year and most analysts expect that Pakistan is seeking a bailout, either from the IMF or its closest ally China, to avoid a currency crisis.
Reuters stated that Beijing has pledged $57 billion in loans for Pakistan as part of China’s vast Belt and Road initiative, deepening the economic and diplomatic ties between the neighbors at a time when relations between Islamabad and Washington are fraying.
U.S. Secretary of State, Mike Pompeo, on Monday, warned that IMF should not provide funds to Pakistan’s incoming government to pay off its Chinese lenders.
In response, Pakistan’s Finance Ministry sought to de-couple the link between any potential IMF bailout and Beijing’s loans for the China-Pakistan Economic Corridor (CPEC).
First and foremost it is totally wrong to link the IMF package with CPEC. It is affirmed that Pakistan Government is fully committed to undertake and complete CPEC projects in their totality. Third parties cannot weaken our collective resolve to make CPEC a success story.
Reuters reported that CPEC is billed as Pakistan’s most important national project, while Beijing has touted CPEC as the “flagship” project in the vast Belt and Road initiative to build rail, road and maritime links across the globe. Both countries are very sensitive to any criticism about the CPEC.
The US has been concerned that China is saddling smaller countries with debt as a way to gain influence and control around the globe.
“Make no mistake. We will be watching what the IMF does,” Pompeo said.
On Tuesday, Chinese Foreign Ministry spokesman Geng Shuang said that the IMF has its own standards and operating rules when cooperating with countries.
“I believe they will handle it appropriately,” he told the reporters without elaborating it further.