Despite IMF loans, Pakistan continues to rely on China
Apr 10, 2021
Islamabad [Pakistan], April 10 : Pakistan is set to address a dozen conditions in six months to meet the USD 6 billion International Monetary Fund (IMF) programme as the debt-ridden country continues to rely heavily on its all-weather friend China, for additional support, according to a media report.
The international lender on Thursday released its staff country report of the USD 6 billion programme, showing that Pakistan's external financing needs are still largely met by Beijing, The Express Tribune reported.
The report also said that Pakistan's economic endurance still hinges upon an USD 11 billion continued Chinese lifeline.
According to the IMF, Pakistan's gross external financing needs -- the funds that it needs to pay off foreign loans and finance its imports -- amount to USD 27 billion over the next 12 months.
The Pakistani daily said these financing needs will be met by support from China's USD 10.8 billion, the UAE's USD 2 billion, the World Bank's USD 2.8 billion, the G-20's USD 1.8 billion initiative, the Asian Development Bank's USD 1.1 billion, and the Islamic Development Bank's USD 1 billion.
Pakistan authorities have remained engaged with external creditors to secure financing to meet the extended fund facility (EFF) program's debt sustainability objectives, according to the staff report.
"China has maintained its exposure by renewing (and augmenting) the CYN 30 billion (about USD 4.6 billion) three-year bilateral currency swap (about USD 3 billion at the time of EFF approval), as well as by renewing the maturing commercial loans as part of the program financing assurance commitment, the IMF report said
China has also provided an additional USD 1billion deposit in July 2020, raising the State Administration of Foreign Exchange (SAFE) deposits to USD 4billion, IMF report added.
In recent years, Chinese loans have fueled a massive buildout of Pakistan's power generation, financing that has turned a perennial electricity shortfall into a now-massive capacity surplus that the highly indebted nation can increasingly ill-afford, Asia Times reported.
In those debt-rescheduling talks, Pakistani officials are also reportedly asking their Chinese counterparts to decelerate agreed plans to build even more power plants that would add to the overcapacity problem.
Official figures indicate that Pakistan's total debt servicing liability could surpass USD 14 billion by the end of the year.
