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October 13, 2018
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Pak financial woes rooted in Chinese loan: US

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October 13, 2018

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WASHINGTON: The United States has reminded Pakistan once again that its request to the International Monetary Fund (IMF) for financial assistance will be evaluated and examined closely, as its current economic situation was due to Chinese debt.

"In all cases, we examine that closely from all angles of it, including Pakistan's debt position, in evaluating any type of loan programme," State Department Spokesperson Heather Nauert said, adding, “This was something that we have been tracking fairly closely."

During a media briefing on Thursday, Nauert said Secretary of State Mike Pompeo had spoken about lending money to Pakistan. Secretary Pompeo had stressed a couple of months ago that any potential IMF bailout for the country should not provide funds to pay off Chinese lenders.

"Make no mistake. We will be watching what the IMF does," he had warned, "There's no rationale for IMF tax dollars, and associated with the American dollars that are part of the IMF funding, for those to go to bail out Chinese bondholders or China itself."

Answering a question, Nauert said the reason that "Pakistan found itself in this [economic] situation is Chinese debt and the fact that there is a debt that governments have incurred that they maybe thought wouldn’t be so tough to bail themselves out of it, but has become increasingly tough."

Earlier, Pakistan's Finance Minister Asad Umar met the IMF Managing Director Christine Lagarde to formally request financial assistance to help address economic challenges. The IMF announced that its team will visit Islamabad in coming weeks to initiate discussion for a possible economic programme.

In a separate brief, Ms Lagarde had clarified that the IMF was available to its entire membership, emphasising that "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.

and terms of the debt that is bearing on a particular country. And to really understand the extent and composition of that debt, both in terms of sovereign, in terms of state-owned enterprises and the like of it, so that we can actually really appreciate and determine the debt sustainability of that country, if and when we consider a programme."

"This issue of debt transparency and an appropriate understanding of debt is not only going to apply to Pakistan. It has to apply to all countries. It is part of a necessary disclosure exercise that we have to agree with our members for the purpose of a debt sustainability analysis," she added.

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