US opposes Pakistan bailing out Chinese bondholders with new IMF loan
The US secretary of state has warned Pakistan that any funds provided under a possible $12 billion bailout from the International Monetary Fund should not be used to repay Chinese loans.Pakistan seems to have chronic financial problems. With few natural resources and a problem with brain drain with its relative few entrepreneurs, it is hard to sustain economic growth. It is unwilling to take out the Taliban that hides in its northern frontier.
Mike Pompeo said there was “no rationale” for an IMF package that would be used to shift funds onto Chinese lenders.
Imran Khan, Pakistan’s prime minister-elect after a general election last week, is said to be considering asking for the assistance to try and stabilise the country’s economy.
Speaking only hours he had urged Asian nations to look towards the US for commercial ventures rather than Beijing, Mr Pompeo suggested that any IMF deal for Pakistan would be carefully scrutinised by the US, which is the largest contributor to the fund’s coffers, and has the largest voting rights within the organisation.
“Make no mistake. We will be watching what the IMF does,” Mr Pompeo said in a television interview.
“There’s no rationale for IMF tax dollars, and associated with that American dollars that are part of the IMF funding, for those to go to bail out Chinese bondholders or China itself.”