Gifts from China

With Prime Minister Imran Khan set to visit China next week, the PTI government has been increasing expectations of what could be agreed. There have been reports of an ‘integrated economic package,’ which sounds like another opaque way of describing any financial assistance that Pakistan receives from China. Couching it in fancy words will not take away from the reality from the fact that the PTI government has been peddling the begging bowl to whoever they meet. When it comes to China, Pakistan already owes a significant amount of debt to the country with respect to CPEC. The numbers have not been made public, which is a continued indication of how little transparency exists in the financial dealings of various Pakistani governments. The PTI has been no better. The terms of the Saudi agreement have not been made public – and it seems unlikely that they will be. The same can be expected of any agreements with China. What is presented as ‘mutual agreements’ could be read as the necessary costs that being a recipient nation entail. It remains to be seen what agreements come out of the PM’s China visit, but one would hope that the deals made are open to the public.

Finance Minister Asad Umar has insisted there were no conditions attached to the Saudi funding, nor will there be with respect to any Chinese funding. Chinese ambassador to Pakistan Yao Jing has clarified the same, insisting that CPEC is not responsible for Pakistan’s economic problems. The ambassador has said that only six percent of Pakistan’s international debt is Chinese, at around $19 billion, with a two-percent interest rate. He has also promised ‘good news’ after PM Khan’s visit to China. A good Chinese visit could set Pakistan up well for the IMF visit on November 7.

The good thing is that the PTI government could resolve the funding shortfalls for the current year within two weeks. But there seems to be little long-term planning. It is likely that the same circle will be repeated next year unless some more permanent solutions are found. Austerity plus more loans is not a recipe for good economic management. Austerity can only result in a decrease in economic growth, which will do little to address the crippling balance of trade issues Pakistan has. Pakistan is looking to push China to invest in the PTI’s new housing programme. Any such assistance will be welcome but there is too much fancy talk. Information Minister Fawad Chaudhry talked up the possibility of sending the first Pakistani to space in 2022 with Chinese assistance. How can a country that is peddling the begging bowl talk about sending someone to space? Such talk seems like another distraction from real issues, which involve complicated financial agreements with a country that Pakistan is already in significant debt in. There is potential for something solid with China, but there is need for more transparency to be able to understand the economic direction that the PTI will take us on.