Any potential IMF bailout for the new government in Pakistan should not be used for repaying Chinese lenders, says the US
The United States welcomed the new leadership in Pakistan. The welcome message came with a warning.
Any potential IMF bailout for the new government in Pakistan should not be used for repaying Chinese lenders, says the US.
As Pakistan held its election on July 25, former cricket hero Imran Khan’s PTI has emerged victorious with the most number of seats in Parliament. Imran is likely to be sworn in as the new prime minister.
“First, there is new leadership in Pakistan,” said US Secretary of State Mike Pompeo in an interview with CNBC television on Monday. “We welcome engagement with them in a way that we think will benefit each of our two countries. Second, make no mistake – we will be watching what the IMF does. 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.”
The Financial Times reported on Sunday that senior Pakistani finance officials were drawing up options for Khan to seek an IMF bailout of up to $12 billion. An IMF spokesperson said: “We can confirm that we have so far not received a request for a Fund arrangement from Pakistan and that we have not had discussions with the authorities about any possible intentions.”
Pakistan has had 14 IMF financing programmes since 1980, according to fund data, including a $6.7 billion three-year loan programme in 2013.
On the other hand, Imran said in a post-election press conference that he wanted a “balanced relation” with the US. The US thinks that it helps Pakistan fight its war on terror, which is hurting us, he said. “We want a balanced relation with the US. We want to play the role of mediator in the Middle East.”