Pakistan likely to pay back IMF before Chinese debt: US Treasury official

Thursday, 29 November 2018 00:00 - - {{hitsCtrl.values.hits}}

David Malpass, Under Secretary for International Affairs at the U.S. Department of the Treasury, gestures during the 2018 G20 Conference entitled "The G20 Agenda Under the Argentine Presidency", in Buenos Aires, Argentina - REUTERS

WASHINGTON (Reuters): Pakistan is likely to pay off an International Monetary Fund bailout before its loans from China come due, easing concerns that IMF funds will be used to pay back Chinese creditors, the US Treasury’s top diplomat said on Tuesday.

David Malpass, the Treasury’s undersecretary for international affairs, told a US Senate Foreign Relations subcommittee hearing that the Trump administration was pushing for more transparency in Chinese lending, including to Pakistan.

Pakistan is negotiating with the IMF over terms of its second bailout since 2013, a loan package valued at about $6 billion, according to local media, with a deal now expected in mid-January.

Pakistan’s new President, Imran Khan, requested the bailout in October to deal with a mounting balance-of-payments crisis.

Pakistan is a major recipient of China’s Belt and Road infrastructure initiative, with Beijing pledging to finance some $60 billion in port, road and railway projects there. But Pakistan’s debt woes have prompted Islamabad to scale back some of the projects.

“One of the challenges is that in many cases they haven’t disclosed the terms of that debt,” Malpass said of the Chinese loans to Pakistan. “In general terms, we think the maturity of the Chinese debt comes after the IMF would have been repaid.”Secretary of State Mike Pompeo said earlier this year that there was “no rationale” for a program that repays Pakistan’s loans to China.

Malpass said the challenge in the Pakistan-IMF talks is to forge a program that will foster “substantial economic reform” in Pakistan and put its finances on sustainable path.