WASHINGTON – US 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.

“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 Timesreported on Sunday that senior Pakistani finance officials were drawing upoptions 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.” Pakistanis struggling to avert a currency crisis that has presented the newgovernment with its biggest challenge. Many analysts and business leadersexpect that another IMF bailout, the second in five years, will be neededto plug an external financing gap.Pakistan, which already has around $5 billion in loans from China and itsbanks to fund major infrastructure projects, had sought another $1 billionin loans to stabilize its plummeting foreign currency reserves.—TNS