- Islamabad reaffirms commitment to completing China-Pakistan Economic Corridor projects
- US Secretary of State Mike Pompeo warned that an IMF bailout for Pakistan’s new government should not provide funds to pay off Chinese lenders
KARACHI: Pakistan has dismissed US concerns that it will use a potential International Monetary Fund (IMF) bailout to repay its debts to China.
US Secretary of State Mike Pompeo on Monday said: “We’ll be watching what the IMF does. There’s no rationale for IMF tax dollars, and associated with that American dollars that are part of the IMF funding, for those to go to bail out Chinese bondholders or China itself.”
Former Pakistani Finance Minister Dr. Salman Shah told Arab News that Pompeo’s remarks are “embarrassing” for the IMF “because it gives the impression that it’s being run as per the wishes of the US.”
Dr. Waqar Masood, former federal finance secretary, told Arab News: “The amount received from the IMF isn’t used to pay off debts. The funds are meant to build up foreign exchange reserves. This money isn’t used by the government for budgetary purposes.”
Senior economist Dr. Ikram-ul-Haq described Pompeo’s remarks as a “cheap shot” and a “political statement,” saying: “IMF money goes to increase reserves.”
Pompeo’s remarks “will not affect the prospects of getting IMF support,” he added. “In fact, by saying this, the US publicly admitted that IMF operations are part of American foreign policy matters.”
Pakistan is seeking up to $12 billion from the IMF to support its ailing economy, which is facing a high current account deficit of $18 billion, mainly due to high import bills and insufficient exports and home remittances.
The country’s foreign exchange reserves have been exhausted. At $9 billion, they are not enough to cover import requirements for two months.
Pakistan held a general election on July 25, with Imran Khan’s Pakistan Tehreek-e-Insaf (PTI) party winning a majority of seats in the National Assembly.