China on Monday endorsed Pakistan’s request to International Monetary Fund (IMF) for financial assistance for addressing its economic challenges, but cautioned that the facility should not affect economic cooperation between Islamabad and Beijing.
“As a member of the IMF, China supports the organisation in making an objective evaluation of Pakistan based on professionalism and earnestly helping it properly address the current difficulty,” Chinese foreign ministry spokesperson Lu Kang said at his press briefing in Beijing. His remarks were shared with the Pakistani media by the Chinese Embassy in Islamabad.
Pakistan had last week formally applied for IMF assistance to deal with the impending balance of payments crisis. Although, it isn’t clear as yet how much money Pakistan could be requiring, Prime Minister Imran Khan has said that the country could need around $12 billion to deal with the problem.
A team of IMF officials is scheduled to visit Islamabad on Nov 7 for talks on the size of the loan facility that Pakistan would be requiring. As IMF considers Pakistan’s request, its Managing Director Christine Lagarde has said that the lender would need to determine the debt sustainability of the country by having “a complete understanding and absolute transparency about the nature, size and terms” of its debt.
Beijing cautions Islamabad that the facility should not affect economic cooperation between the two countries
Certain quarters believe that Pakistan, which is undertaking China-Pakistan Economic Corridor (CPEC) — a massive infrastructure and connectivity project in collaboration with China, is finding itself in difficult situation because of mounting Chinese debt. This view is supported by the US, which has significant influence on the IMF board.
State Department spokesperson Heather Nauert had after submission of Pakistan’s request for IMF assistance said: “Pakistan has formally requested assistance from the International Monetary Fund. In all cases, we examine that closely from all angles of it, including Pakistan’s debt position, in evaluating any type of loan programme. … I think part of the reason that Pakistan found itself in this situation is Chinese debt and the fact that there is debt that governments have incurred that they maybe thought wouldn’t be so tough to bail themselves out of, but has become increasingly tough”.
Secretary of State Mike Pompeo had spoken about it long before Pakistan had even reached out to IMF for help. He had on that occasion said that IMF bailout for Pakistan would benefit China.
Chinese spokesman Lu strongly rejected the perception that CPEC debt was adding to Pakistan’s financial woes. Recalling Pakistani finance ministry’s figures, he said, “the debt incurred by CPEC makes up a very small proportion of Pakistan’s debt composition and it is not to blame for the current financial difficulty in Pakistan”.
While China is supporting Pakistani request, the spokesman underlined that any programme for Pakistan should not affect the normal bilateral cooperation between China and Pakistan.
Finance Minister Asad Umar had after returning from Bali, where he held talks with IMF officials, said that Pakistan might not accept an IMF facility if it finds its conditions unsuitable for its national security.
It should be recalled that China is on the third spot in terms of voting shares at IMF, behind the United States and Japan.