Finance Minister, Asad Umar has said that Pakistan is ready to share details of the debt related to the China-Pakistan Economic Corridor (CPEC) with the International Monetary Fund (IMF).
The decision to approach the IMF for a bailout package was finalized after consultations with friendly countries, he noted. Speaking at a press conference in Islamabad upon his return from Indonesia where he met with IMF’s Managing Director Christine Lagarde, Umar categorically denied US’s claim that Pakistan’s current financial crunch is due to the debt accrued on CPEC projects.
Pakistan currently requires $12 billion to stabilize the economy.
That is why even though the PTI government was earlier adamant not to put Pakistan in a subservient position of having to seek help from IMF, they are now forced to formally reach out for help. In regards to this IMF bailout package that is under negotiation, the United States has also said that it will examine closely Pakistan’s request for a loan from the International Monetary Fund(IMF), adding that “part of the reason that Pakistan found itself in this situation is Chinese debt”. In response to this, perhaps to alleviate any public fears of a breach of national sovereignty and integrity, Umar has said that the US has no veto over the IMF’s decision to grant Pakistan a bailout package.
However, on Tuesday IMF’s chief economist Maurice Obstfeld also urged Pakistan to review the loans it was receiving from China.
Moreover, the US is the largest contributor to the IMF and has 17.68 per cent of voting rights in major decisions. China is third, behind Japan, and controls 6.49 per cent of the economy. Umar says that this voting power is not to be feared because the IMF still needs at least 51 per cent of the vote to make a decision in favour of or against Pakistan. Contrary to his statement, if you conflate the US’s voting power with the notion that IMF itself is somewhat reinforcing the US’s concern over Pakistan’s situation due to CPEC, it can be said that Pakistan does have something to worry about.
And, we cannot even begin to do away with the symbolic power the US holds geopolitically. Even if Saudia Arabia and China haven’t imposed any undue conditions on Pakistan for financial assistance, it still cannot be ignored that the nexus of these four countries is often acutely incomprehensible. The US never dares to say anything to Saudia, because, well you know: oil. Even though Saudia is known for some insane human rights violations, the US would never go out on an international forum against them, even if it means not supporting Canada when the Kingdom announced sanctions against the country. Similarly, Saudia never really says anything against the US. The economic opportunism runs far too deep.
Adding to this mix is the Pak-Cheen dosti.
And conversely, US-China resistance is also a problem in the equation. The main concern the US in the IMF bailout situation is that they don’t want to inadvertently be paying Pakistan’s debt in CPEC. This would, of course, mean indirectly relaying funds into China and no surprise the US doesn’t want that. There is no denying CPEC is contentious. On one hand, it is helping create jobs (let’s not get into what the permanency of those jobs and subsequent security is for those involved in CPEC). But on another, there is an undeniable entrapment of niceties, which Pakistan will continue to have to keep up with in a new age of neo-liberalism.
Of course, Pakistan’s economic situation is far more complex and the decisions taken in the coming months will be key in helping alleviate the burden.
It does, however, help to know the geopolitical nexus that will govern our economy going forward. Asad Umar and the PTI government can claim all they want that national integrity and sovereignty will remain intact, but the fact of the matter is there is an obvious upper hand that all three countries we call friends will have in the future of our economy. And make no mistake, they will look out for themselves first, lest we need to remind anyone.
Umar pointed out again that this IMF bailout was inevitable given the mess left by the previous governments.
On more than one occasion, PTI has cited that the PML-N and PPP governments also took the same IMF bailout option as PTI is. It has just been a pattern. Yes, Khan sahab and people, we know that. It’s just that you came to power with a very different narrative and while we see the ‘need’ to resort to IMF, we are also waiting for some concrete policies that will carry us through once this potential bailout package falls through over however many years.
In regards to this, Umar recognized that it is important for Pakistan’s trade gap between $60bn imports and $25bn exports has to be reduced. Only then will the country begin to address economic concerns. So the government has identified the problem. Great! What the people are seeking are concrete policies on how the government will follow through on this.
For now, a lot is mere speculation and nice talk in terms of protecting the burdened classes and what not. What we are really sitting tight on is tangible action and for policies to be enacted with immediate effect.
And, also a whole lot of anxiety over how this IMF bailout situation will turn out come Nov 7, when the IMF delegation is set to visit Pakistan to assess the situation and make a decision.
*Feature Image Source: Jamal Khursheed/Express Tribune*