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US says Chinese debt is responsible for Pakistan’s economic challenges

October 12, 2018

AFP Photo: Heather Nauert

The US has termed the Chinese debt to be ‘responsible’ for the economic challenges Pakistan is facing.

“We understand that Pakistan has formally requested assistance from the International Monetary Fund,” State Department spokesperson Heather Nauert said on Friday. “In all cases, we examine that closely from all angles of it, including Pakistan’s debt position”.

She said this something that the US has been tracking fairly close.

“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 may be thought wouldn’t be so tough to bail themselves out of, but has become increasingly tough.”

In July, US Secretary of State Mike Pompeo voiced concerns over any IMF bailout being used to repay Chinese loans to Islamabad.

“There’s no rationale for IMF tax dollars — and associated with that, American dollars that are part of the IMF funding — for those to go to bail out Chinese bondholders or China itself,” Pompeo told US television station CNBC.

Related story: IMF may seek details of Chinese debt before processing Pakistan’s bailout request

In a press conference in Bali on October 11, IMF Managing Director Christine Lagarde indicated that the fund may seek details of Chinese debt on Pakistan before processing a possible bailout package.

“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 Lagarde told reporters in Bali.

Related story: Pakistan formally asks the IMF for a bailout package

An IMF team will visit Islamabad in the coming weeks to discuss a possible IMF-supported program, the IMF said in a statement.

“This issue of debt transparency and an appropriate understanding of debt are not only going to apply to Pakistan. It has to apply to all countries,” Lagarde said.


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