ANI (6 July 2022) – The International Monetary Fund (IMF) intends to ban Pakistan from borrowing more from China, according to reports.
Islamabad’s plan to seek PKR 7.9 billion from China for China Pakistan Economic Corridor (CPEC) projects is now likely to hinge upon the IMF recommendations. Driving Pakistan’s economy with the help of external doles is unsustainable and Pakistan desperately needs structural reforms.
The IMF has raised objections to Pakistan’s loans from China and arbitrarily high payments made to Chinese independent power producers (IPP), suggesting Islamabad renegotiate its energy agreements with Beijing, reported Financial Post. Pakistan is obligated to pay more than PRs. 350 billion power dues to multiple Chinese IPPs operating in the country.
IMF’s demand follows Beijing’s rejection of modifying the conditions of agreements for projects under the CPEC. A major part of the budget expenditure PKR 3,950 billion (USD 19.5 billion) – more than 40 pc of the total federal budget expenditure (PKR 9,502 billion; USD 47 billion) is allocated for debt servicing which is 29.1 pc rise over the previous year. Pakistan’s economy is facing a challenging task as the budget for FY 2022-23 has failed to address the key structural issues which are proving as an obstacle to the revival of the country. The country’s economy is already marred with a huge deficit while inflation is getting out of control with an imminent threat of looming default. With the IMF deal hanging in balance, the authorities should have endeavored to take up bold structural reforms, but the budget disappointed, as per the media portal.
Pakistan Finance Minister Miftah Ismail’s USD 47 billion federal budget for the ensuing fiscal year has done very little to address the fundamental problems Islamabad’s economy faces. As Pakistan’s traditional partners have faltered from bailing the country out of this huge debt, its only hope is on the revival of the Extended Fund Facility of the IMF. However, the IMF expressed its dissatisfaction and unhappiness over the measures in the budget to meet its conditionality to revive the USD 6 billion funding.