IMF warns Pak­istan against ‘ex­ces­sive loans’ from China

The Miracle - - Pakistan -

NUSA DUA: Pak­istan has not yet for­mally ap­proached the In­ter­na­tional Mone­tary Fund for fi­nan­cial as­sis­tance, but if bailout talks get un­der­way this week, the goal will be to help Pak­istan reach its full po­ten­tial, the IMF’s chief econ­o­mist said on Tues­day. 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. Ob­st­feld said Pak­istan is fac­ing fi­nanc­ing gaps as it has been hit by a large fis­cal and cur­rent ac­count deficit, a low level of re­serves and a cur­rency he de­scribed as “too rigid” and over­val­ued. Fi­nance Min­is­ter Asad Umar said on Mon­day the gov­ern­ment would seek to open talks with the IMF in Bali this week for emer­gency fi­nan­cial as­sis­tance. Prime Min­is­ter Im­ran Khan had ear­lier sought al­ter­na­tives to a sec­ond bailout pro­gramme in five years from the IMF as it im­pose aus­ter­ity and limit his vi­sion of an Is­lamic wel­fare state. Ob­st­feld said that if the IMF does en­ter into talks with Pak­istan this week on a pos­si­ble new fi­nanc­ing pro­gramme, the goal would be re­forms that would help Pak­istan reach its “im­mense po­ten­tial” with­out pro­vid­ing spe­cific de­tails. “The gov­ern­ment has ex­pressed its de­sires to en­act deep struc­tural re­forms that might break the cy­cle of Pak­istan need­ing fi­nan­cial sup­port from the Fund,” he said. In­fras­truc­ture needs Pak­istan needs more in­fras­truc­ture de­vel­op­ment, Ob­st­feld added, and the coun­try could ben­e­fit from China’s role in sup­port­ing its project fi­nanc­ing. But China’s in­volve­ment could also bring po­ten­tial risks, he said. “It is im­por­tant that the de­sign of the projects... be solid and ex­ces­sive debts which can­not be re­paid are avoided,” the IMF chief econ­o­mist said. Is­lam­abad has cut the size of the big­gest Chi­nese “Silk Road” project in Pak­istan,

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