Lagarde: IMF to seek absolute transparency of Pakistan’s debts
Team to visit Islamabad as formal bailout talks get under way
The International Monetary Fund launched formal bailout talks with Pakistan yesterday, and IMF managing director Christine Lagarde said she would require “absolute transparency” of Pakistan’s debts, including those owed to China.
She said such disclosures were necessary to determine the debt sustainability of countries seeking IMF loans.
The requirements are likely to shine a spotlight on the extent, composition and terms of Pakistan’s debts to China for infrastructure projects as part of Beijing’s massive Belt and Road building programme.
China has pledged some $60 billion in financing to Pakistan for ports, railways and roads, but rising debt levels have caused Islamabad to cut the size of the biggest Belt and Road project by some $2 billion.
“In whatever work we do, we need to have a complete understanding and absolute transparency about the nature, size, and terms of the debt that is bearing on a particular country,” Lagarde told a news conference when asked about Pakistan’s debts to China.
“An IMF team will visit Islamabad in the coming weeks to initiate discussions for a possible IMF-supported economic programme. We look forward to our continuing partnership,” Lagarde said in a statement. Analysts say Pakistan is seeking $8 billion in loans in order to address a rapidly growing balance of payments crisis.
Pakistani expatriates are worried about the plunging rupee, saying it will ruin their investments and make life difficult for their families back home. The news of 8.7 per cent devaluation of the Pakistani rupee against the dollar in just one day on Tuesday came as a shock to overseas Pakistanis who say that ‘life will be tough for their families back home’ and now they will have to remit more money to help them cope with increasing prices of commodities.
The rupee fell to all-time low of 35.6 against the dirham on Tuesday. The rupee has plunged 26 per cent since December 2017, leading to inflation and massive price hike.
Iqbal Dawood President of Pakistan Business Council in Dubai
Dawood told Gulf News that the devaluation of the rupee was expected but not this much.
“We are worried because exports from Pakistan will cost much more now. It will have huge impact on trading,” he said. Dawood, however, stressed that the devaluation was a short term “shock”, but will lead to long-term stability in the country. “Overseas Pakistani should help their country by remitting more money,” he said.
Haji Mohammad Yaseen Importer of fruits and vegetables
Yaseen, who is one of the largest importers of fruits and vegetables, apart from other foodstuff from Pakistan is worried that his customers here will have to pay more to buy Pakistani products.
“Profit margins will reduce and it will have negative impact on our businesses,” he said.
Malek Zaheer Awan Abu Dhabi based businessman
Awan said that the Pakistani government is under immense pressure because of debt payments and is forced to take tough decision to salvage itself from economic crisis.
“We, the overseas Pakistanis, will have to come forward and invest in Pakistan by sending foreign remittances, but so far the government has ignored us as there are no incentives announced for us,” he said, adding that lack of trust between the government and overseas Pakistanis will further deteriorate the economic situation.
Shahid Khan Dubai resident
Khan said salaried persons in Pakistan would face tough task to make both ends meet due to more inflation as there is no increase in salaries.
“Expatriates are now remitting more money to buy properties back home but those who already invested in the real estate are suffering huge losses due to rupee devaluation.
He said that government should take overseas Pakistanis into confidence to attract investment from them.”
Suhail Khawar Sharjah-based businessman
Khawar said that he imports foodstuff from Pakistan and the cost of import has already increased a lot. “We now get more money in Pakistan through our foreign remittance but the cost of commodities and their transportation have gone much higher,” he said.
Raja Ekram Former banker and businessman
The Dubai resident said that the falling rupee would lead to price hike and inflation and put more burden on overseas Pakistanis as they will have to remit more money to their families. “Expatriates will have to help their country by sending remittances through legal banking channels,” he said.
8.7% Pakistani rupee’s devaluation against dollar on Tuesday