October 26, 2018: Prime Minister Imran Khan, accompanied by Foreign Minister Shah Mahmood Qureshi will visit China from November 2 – 5 to meet Chinese President Xi Jinping and Premier Le Keqiang. He is expected to secure another $3-5 billion from ‘all-weather’ partner to help avert balance of payment crisis.
Prime minister recently returned from Saudi Arabia where he delivered a speech on Pakistan’s investment potential at the Future Investment Initiative in Riyadh. According to the ministry of foreign affairs press release, Pakistan was successful in obtaining $6bn loan from the peninsula – $3bn for a period of one year and a one year deferred payment facility of$3bn for oil imports.
Pakistan urgently requires $12bn to fill up the widening financing gap. Finance Minister Asad Umar officially requested International Monetary Fund (IMF) for a bailout on 11 Oct.
Saudi Arabia also confirmed its interest to invest in an oil refinery in Pakistan and is currently awaiting cabinet’s approval.
After returning from Saudi Arabia, prime minster in a public address suggested that after funds from Kingdom, the conditions from IMF will likely be less harsh.
Khan’s Chinese visit is in-line with his plan to secure funding from brotherly countries – China and Saudi Arabia – to avert BoP crisis.
Foreign ministry spokesperson said that, “The visit will provide an opportunity for the two countries to review the entire spectrum of bilateral relations with special reference to China-Pakistan Economic Corridor (CPEC)”.
He is also expected to sign various agreements in “diverse fields” and is also lined up as a key note speaker at the ‘First China International Import Expo’ in Shanghai.
However, he has also hinted at a third country for funding which the experts anticipate is either Malaysia or Untied States.
Chinese opinion has been positive on Imran Khan, since before getting elected in to power, he met with Chinese leadership in 2011 to ensure them of his all-out support to $62bn CPEC project.
In a recent article published in China’s leading daily, Chinese authorities attribute him to be, “well aware of circumstances,” and also emphasized that he “has good reason to reach out to China; he sees it as a role model for fighting his country’s rampant poverty and corruption and getting the economy on track.”
Chinese media on the other hand have also been sympathetic of Khan’s views regarding the over burdening debt from China. The news report attributing him to be “well-aware” of the China-Pakistan relationship, also said “the multibillion-dollar loans from China and the shaky state of the Pakistani economy, riven by a BoP crisis, soaring debts and plunging currency, seemingly back such an assertion”.
It also, however, warned that the present government must overcome the recent “claims by rivals that Khan fraudulently won the election with the military’s help”.
Regardless of the outcome of his upcoming visit, prime minister has been actively pursuing all options to secure enough funding before IMF discussions begin in November. He has also been under severe criticism for his austerity campaign, increasing gas and electricity prices and decreasing development budgets to reign in the fiscal deficit.
However, some of his campaign promises – $150bn housing project – are being labeled as extravagant by the opposition parties. An IMF loan – coupled with tighter regulations – is expected come in the way of his plans.