China assures financial backing to Imran Khan’s incoming government

August 13, 2018

China has assured Pakistan that it will continue to help Pakistan overcome the crunch on foreign payment, senior PTI members told the Financial Times.

“China has promised to continue helping Pakistan overcome the crunch on foreign payments,” one prospective cabinet minister told the FT.

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.

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”.

Imran Khan, the PTI chairman, is going to swear-in as Pakistan’s next Prime Minister on August 18.

“One of his first tasks will be to repair the country’s balance of payments problem, with high imports and low exports having left it with only $10.4b in foreign currency, according to the latest published statistics — enough to cover two months’ worth of imports,” the FT wrote.

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.”

Beijing has not told Islamabad how much it might be willing to lend, or whether it will be enough to avoid an IMF bailout. But Mr Umar told reporters last week the Chinese ambassador to Pakistan had given the incoming government “his assurance that China is a friend that Pakistan can count on”.