China hints to rescue Pakistan from deep financial crisis: International media
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ISLAMABAD - China has once again stepped in to rescue Pakistan from the deep financial crisis forcing Pakistan to seek IMF bailout.
Pakistan has been guaranteed financial backing from People's Republic of China as the incoming Imran Khan-led Pakistan Tehreek-e-Insaf government looks to avoid going to the IMF to stablisie foreign exchange reserves, reported Financial Times.
PTI leaders have been told by Chinese government that they will get further loans from Beijing over the coming months as one way to keep their currency stocks topped up.
"Chinese state-backed banks have lent Pakistan more than $5bn in the past financial year as Islamabad has become increasingly reliant on its northern neighbour to secure its finances," said a report published in the Financial Times.
One prospective cabinet minister told the FT: “China has promised to continue helping Pakistan overcome the crunch on foreign payments.” Another senior party leader said: “The Chinese have signalled their intent to keep helping Pakistan avoid a crisis, a default.” But he added that Chinese officials have urged their Pakistani counterparts “to take steps to reduce the large deficit”.
Prime Minister-elect Imran Khan's first tasks is expected to be repairing the country’s balance of payments problem, with high imports and low exports having left it with only $10.4bn in foreign currency.
Officials have drawn up plans for the new government to approach the IMF for a bailout worth up to $12bn, which would be Pakistan’s 13th bailout from the fund and its largest ever.
The US, the IMF’s biggest shareholder, has urged the fund not to issue a loan unless Islamabad publishes full details of the loans it has taken from China to pay for a $60bn infrastructure scheme.
With Islamabad and Beijing reluctant to reveal loan details, officials in the Pakistani government have begun to explore other sources of funding.
Asad Umar, the expected finance minister, said turning to the IMF as a “fallback option”, to be sought once other routes had been explored.
One finance ministry official told the FT: “Clearly, we mustn’t put all our eggs in the IMF basket. At least for the sake of argument, our future plans should also include a back-up which is built on Chinese money.”
