Pakistan likely to pay off IMF bailout before loans from China mature

November 28, 2018 (MLN): Concerns regarding IMF bailout funds being used by Pakistan to pay off Chinese debt were waivered off when a US Treasury’s top diplomat said that Pakistan is likely to settle IMF loans before loans from China come due.

According to a report by Reuters, Pakistan knocked on the doors of IMF for the second time in five years, after it faced severe Balance of Payment crisis amounting to $12 billion. While the country has been successful in obtaining funds from Saudi Arabia and China, it expects to receive around $6 billion from IMF, with a deal now expected in mid-January.

However, Trump administration has been pushing for more transparency in Chinese lending, including to Pakistan.

Talking about Chinese loans given to Pakistan, Malpass said “One of the challenges is that in many cases they haven’t disclosed the terms of that debt. In general terms, we think the maturity of the Chinese debt comes after the IMF would have been repaid.”

Malpass also said a lack of transparency in Chinese lending was not unusual, noting that basic terms like the interest rate and maturity are often not disclosed, sometimes even to some parts of the borrower governments.