– link – link
WASHINGTON – U.S. Secretary of State Mike Pompeo warned on Monday that anypotential International Monetary Fund bailout for Pakistan’s new governmentshould not provide funds to pay off Chinese lenders.
In an interview with CNBC television, Pompeo said the United States lookedforward to engagement with the government of Pakistan’s expected new primeminister, Imran Khan, but said there was “no rationale” for a bailout thatpays off Chinese loans to Pakistan.
SPONSORED
“Make no mistake. We will be watching what the IMF does,” Pompeo said.“There’s no rationale for IMF tax dollars, and associated with thatAmerican dollars that are part of the IMF funding, for those to go to bailout Chinese bondholders or China itself,” Pompeo said.
The Financial Times reported on Sunday that senior Pakistani financeofficials were drawing up options for Khan to seek an IMF bailout of up to$12 billion.
An IMF spokeswoman said: “We can confirm that we have so far not received arequest for a Fund arrangement from Pakistan and that we have not haddiscussions with the authorities about any possible intentions.”
Speaking in Beijing, Chinese Foreign Ministry spokesman Geng Shuang saidthe IMF has its own standards and operating rules when cooperating withrelevant countries.
“I believe they will handle it appropriately,” he told reporters, withoutelaborating.
Pakistan is struggling to avert a currency crisis that has presented thenew government with its biggest challenge. Many analysts and businessleaders expect that another IMF bailout, the second in five years, will beneeded to Pakistan, which already has around $5 billion in loans from Chinaand its banks to fund major infrastructure projects, had sought another $1billion in loans to stabilize its plummeting foreign currency reserves.
Officials in the Trump administration, including U.S. Treasury SecretarySteven Mnuchin, have criticized China’s infrastructure lending todeveloping countries, arguing that this has saddled them with unsustainabledebt.
The $57 China-Pakistan Economic Corridor, a series of port and railimprovements associated with China’s One Belt One Road infrastructure push,has led to massive imports of Chinese equipment and materials, swellingPakistan’s current account deficit.
Pakistan has had 14 IMF financing programs since 1980, according to funddata, including a $6.7 billion three-year loan program in 2013.