Pakistan seeks IMF bailout from CPEC debts

The announcement followed a meeting between Pakistan finance minister Asad Umar with Lagarde at the IMF summit in Bali, Indonesia, on Thursday.

Lagarde, however, made it clear that the IMF would require absolute transparency on Pakistan's debts

Lagarde issued a statement saying that “during the meeting, they requested financial assistance from the IMF to help address Pakistan’s economic challenges.” 

“An IMF team will visit Islamabad in the coming weeks to initiate discussions for a possible IMF-supported economic programme,” she added.

Pakistan's current year debt repayments are about $9 billion but, he said, all of that is not due to the debt owed to China under the $50 billion CPEC.

Asad Umar said Pakistan is ready to share details of the debt related to the China-Pakistan Economic Corridor (CPEC) with the International Monetary Fund (IMF), even as he rejected the US view that China-funded projects were to blame for the cash-strapped country's current economic woes. 

Back in Islamabad from Indonesia where he requested IMF's managing director Christine Lagarde for a bailout package for Pakistan, Umar said the decision to approach the global lender was taken after consultations with friendly countries.

The IMF team, Umar said, was scheduled to arrive in Pakistan on 7 November to negotiate the programme, likely to span over a three-year period.

He said Pakistan's current year debt repayments were about $9 billion but obviously it would not entirely be available from the IMF.

The IMF, Umar said, had asked for details of loans, including the ones secured in relation to the CPEC projects, for analysing the debt sustainability.

Pakistan would share "normal debt-related information about CPEC with the IMF", The Express Tribune Sunday quoted the finance minister as saying.

Umer also said the Pakistan government had decided to approach the Fund in consultation with friendly countries. He did not identify these countries but Islamabad was in contact with China and Saudi Arabia in recent weeks.

Lagarde, however, made it clear that the IMF would require absolute transparency on Pakistan's debts, including those owned by China under the $50 billion CPEC.

The US, on Friday, 12 October, said that the huge Chinese debt was responsible for the economic challenges in Pakistan, adding that it will review Islamabad’s bailout plea to the IMF from all angles, including the country’s debt position.

Umar, however, rejected the US State Department's statement, suggesting that the debt accrued on the CPEC projects was to blame for Pakistan's current economic crisis.

The CPEC is a network of infrastructure projects that are currently under construction throughout Pakistan that will connect China's Xinjiang province with Gwadar port in Pakistan's Balochistan province. It is the part of Chinese President Xi Jinping's ambitious Belt and Road initiative.

"We understand that Pakistan has formally requested assistance from the 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 had said, adding this is something the US has been tracking fairly closely.