IMF to seek 'absolute transparency' of Pakistan's debts in bailout talks

NUSA DUA, Indonesia: The International Monetary Fund launched formal bailout talks with Pakistan on Thursday, and IMF managing director Christine Lagarde said she would require “absolute transparency” of Pakistan’s debts.

She said such disclosures were necessary to determine the debt sustainability of countries seeking IMF loans.

The requirements are likely to shine a spotlight on the extent, composition and terms of Pakistan’s debts to China for infrastructure projects as part of Beijing’s massive Belt and Road building program.

China has pledged some $60 billion in financing to Pakistan for ports, railways and roads, but rising debt levels have caused Islamabad to cut the size of the biggest Belt and Road project by some $2 billion.

“In whatever work we do, we need to have a complete understanding and absolute transparency about the nature, size, and terms of the debt that is bearing on a particular country,” Lagarde told a news conference when asked about Pakistan’s debts to China.

The United States has criticized China’s infrastructure lending, warning that it has saddled some developing countries with debts that they cannot afford to repay. U.S. Secretary of State Mike Pompeo has said there would be “no rationale” for an IMF bailout of Pakistan that pays off Chinese loans.

Lagarde said that the IMF would need to know the extent and composition of the country’s debt, including sovereign debt and state-owned enterprise debt, “so that we can actually really appreciate and determine the debt sustainability of that country, if and when we consider a program,” she added.

Lagarde said in a statement that Pakistan requested IMF assistance during a meeting with Pakistani Finance Minister Asad Umar and central bank governor Tarik Bajwa on the sidelines of the IMF and World Bank annual meetings in Bali.

“An IMF team will visit Islamabad in the coming weeks to initiate discussions for a possible IMF-supported economic program,” Lagarde said. “We look forward to our continuing partnership.”

If a package is agreed, it would be Pakistan’s 13th IMF bailout since 1988. The Fund lent Islamabad $6.7 billion in 2013.