Cost of Pak­istan IMF bailout pack­age could be the CPEC

The New Indian Express - - FRONT PAGE - RAMANANDA SENGUPTA @ New Delhi

PAK­ISTAN’S new Prime Min­is­ter Im­ran Khan, who came to power on pop­ulist, anti-Western plank, had to swal­low his pride and ask the In­ter­na­tional Mon­e­tary Fund (IMF) for a bailout pack­age of over $9 bil­lion dollars to help tide over the coun­try’s acute fi­nan­cial cri­sis.

Fol­low­ing a meet­ing be­tween Pak­istan Fi­nance Min­is­ter Asad Umar with IMF manag­ing di­rec­tor Chris­tine La­garde at the IMF sum­mit in Bali, In­done­sia, on Thurs­day, La­garde is­sued a state­ment say­ing that “dur­ing the meet­ing, they re­quested fi­nan­cial as­sis­tance from the IMF to help ad­dress Pak­istan’s eco­nomic chal­lenges. An IMF team will visit Is­lam­abad in the com­ing weeks to ini­ti­ate dis­cus­sions for a pos­si­ble IMF-sup­ported eco­nomic pro­gramme.”

The re­quest comes at a time when Pak­istan has barely two months of re­serves be­fore it goes bank­rupt. An IMF team, which vis­ited Pak­istan ear­lier this month, had noted that while Pak­istan had started tak­ing some cor­rec­tive ac­tion, these were grossly in­ad­e­quate.

Then there’s the anti-ter­ror Fi­nan­cial Ac­tion Task Force, which af­ter putting Pak­istan on its gray last ear­lier this year, has warned that Pak­istan has not com­plied with its promised re­forms to escape be­ing put on its black­list in Jan­uary. Black­list­ing by the IATF would be

catastrophic for Pak­istan at a time when it is seek­ing bailouts from for­eign in­sti­tu­tions.

But Khan’s woes have just be­gun, since one of the pre­con­di­tions of any IMF loan would be a full dis­clo­sure of the amount Pak­istan owes to China for the China-Pak­istan Eco­nomic Cor­ri­dor (CPEC), whose fi­nan­cial de­tails re­main opaque at best. Pak­istan has taken $60 bil­lion worth of loans from China, much of which is for the devel­op­ment of the CPEC.

In June, US Sec­re­tary of State Mike Pom­peo had cau­tioned against any IMF bailout to Pak­istan that would be used to re­pay its ex­ist­ing debt to China. “Make no mis­take. We will be watch­ing what the IMF does,” Pom­peo told CNBC tele­vi­sion.

An In­dian of­fi­cial, while re­it­er­at­ing that the cri­sis was of Pak­istan’s own mak­ing, quipped that “half their prob­lems would be solved if they used their ter­ror­ist fi­nances for bet­ter things.”

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