Chinese debt responsible for Pakistan’s economic quagmire, says US

–State Dept spokeswoman says Fund would require absolute transparency on Pakistan’s debts, including those owned by China

WASHINGTON: The United States has held Pakistan’s burden of Chinese debt as one of the reasons responsible for the country’s economic woes and its subsequent bailout request to the International Monetary Fund (IMF).

The State Department on Thursday said it will review Pakistan’s bailout request to the IMF from all angles, including the country’s debt position.

“We understand that Pakistan has formally requested assistance from the International Monetary Fund (IMF). 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 told reporters at a news conference.

Responding to a question, Nauert said, “The secretary had spoken about this a few months back, I know, in some interviews not that long ago. I think part of the reason that Pakistan found itself in this situation is Chinese debt, and the fact that there is debt that governments have incurred that they maybe thought wouldn’t be so tough to bail themselves out of, but has become increasingly tough.”

The State Department response echoed an earlier statement by IMF Managing Director Christine Lagarde.

Lagarde, commenting on the matter on the sidelines of a conference in Bali, Indonesia, confirmed that Pakistan had requested financial assistance from the IMF to help address its economic challenges and that the Fund would be sending its team to Islamabad in coming weeks to initiate discussions for a possible package.

She said the Fund would require absolute transparency on Pakistan’s debts, including those owned by China.

“To really understand the extent and composition of that debt, both in terms of sovereign, in terms of state-owned enterprises and the likes of it, so that we can actually really appreciate and determine the debt sustainability of that country, if and when we consider a programme,” Lagarde said.