US To Review Pakistan's Bailout Application To IMF, Examine Debts To China

| October 12 , 2018 , 10:59 IST

The new Prime Minister of Pakistan, Imran Khan, since coming into power, has openly admitted that his government is lacking funds to run the nation, and has come up with various schemes to raise money.

However, as Pakistan submits its bailout request to the International Monetary Fund (IMF), the US, the nation with the largest voting power at the IMF, has said on Thursday that it will review Pakistan's bailout request from all angles, including its 'huge' Chinese debts.

"We understand that Pakistan has formally requested assistance from the International Monetary Fund (IMF). In all cases, we examine that closely from all angles of it, including Pakistan's debt position, in evaluating any type of loan programme," State Department spokesperson Heather Nauert told reporters at a news conference Thursday.

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"The secretary had spoken about this a few months back, I know, in some interviews not that long ago. I think part of the reason that Pakistan found itself in this situation is Chinese debt, and the fact that there is debt that governments have incurred that they maybe thought wouldn't be so tough to bail themselves out of, but has become increasingly tough," Nauert said.

The US State Department's stand on Pakistan's IMF bailout request appears to be in line with the statement made by IMF Managing Director Christine Lagarde, who said that they would require absolute transparency on Pakistan's debts, including those owned by China.

"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," she said.

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"To really understand the extent and composition of that debt, both in terms of sovereign, in terms of state-owned enterprises and the likes of it, so that we can actually really appreciate and determine the debt sustainability of that country, if and when we consider a programme," Lagarde said.

Pakistan already has around $5 billion in loans from China and Chinese banks to fund major infrastructure projects and has sought another $1 billion in loans to stabilize its plummeting foreign currency reserves.

Since 1980, Pakistan has had 14 International Monetary Fund financing programs, including a $6.7 billion three-year loan program in 2013.