Words, not action: China tells Pak PM it has already done “utmost” on aid
Virendra Pandit
New Delhi: Although Pakistan’s Finance Minister Ishaq Dar said on Saturday last Islamabad would get about USD 9 billion from China and USD 4 billion from Saudi Arabia as bailout packages to shore up its near-bankrupt economy, their ‘promises’ appear more words than action.
For, while China pledged more support to Pakistan on Monday, it also said it had done its “utmost” to stabilize the financial situation of its ‘all-weather’ ally, the media reported on Tuesday.
Pakistan had hoped its engagement with traditional supporters like China and Saudi Arabia would facilitate rolling over maturing loans as part of arrangements for about USD 35 billion in putouts against debt and liabilities during the current fiscal year.
Quoting the Chinese President, FM Ishaq Dar said Xi Jinping, in his November 3 meeting with visiting Prime Minister Shehbaz Sharif, had assured him, “don’t worry, we will not let you down.”
Pakistan owes Paris Club countries nearly USD 10.7 billion. The Paris Club is a group of officials from major creditor nations who find coordinated and sustainable solutions to the payment difficulties experienced by debtor countries.
According to the International Monetary Fund (IMF), Pakistan’s total non-Paris Club bilateral debt currently stands at USD 27 billion, of which Chinese debt is about USD 23 billion.
During PM Shehbaz Sharif’s visit to Beijing, the Chinese promised to roll over USD 4 billion in sovereign loans, refinance USD 3.3 billion commercial bank loans and increase currency swaps by about USD 1.45 billion, the reports said.
He concluded his two-day China visit after the two sides signed several MoUs. Still, without discussing the rescheduling of the debt Islamabad owes to Beijing, which made this trip more of words than action, according to the media.
There was hardly any discussion on the debt crisis Pakistan is confronting, especially for PM Sharif, as it could become a serious liability for his party in the election year 2023, according to Islam Khabar.
Pakistan is scheduled to pay the debt by June 2023 and they committed a significant amount of debt of over USD 20 billion to pay in the next financial year, it said.
During his visit, China pledged a 15 billion yuan (USD 2.1 billion) loan facility for Pakistan, but no concrete support plans were revealed, according to Nikkei Asia.
Their joint statement, released after Sharif’s visit to China, said that Pakistan’s PM had reaffirmed his commitment to further strengthen and deepen the “Pakistan-China all-weather Strategic Cooperative Partnership and enhance practical cooperation in all areas.” The statement did not mention any concrete financing pledges.
Ammar Malik, a senior research scientist at AidData, a research lab at the American University William & Mary, said, “This trip was more words and little action, and mostly about reaffirming Pakistan and China’s all-weather strategic partnership,” according to Nikkei Asia.
Pakistan expected new financial commitments from Beijing under the China-Pakistan Economic Corridor (CPEC), the USD 50 billion Pakistan component of the Belt and Road Initiative (BRI). That was why, before he visited China, Sharif created a 50 billion rupees (USD 225 million) escrow account for automatic partial payments to Chinese independent power producers operating in Pakistan to pacify them and Beijing after tensions over the bills, reported Nikkei Asia.
China did not make any significant financial commitments because of Pakistan’s unprecedented political and economic crises, which made it difficult for Chinese official creditors to commit. The failed assassination bid on former Pakistan PM Imran Khan also worsened their views about the economically and politically unstable South Asian nation.
Fazal Rehman, Director of the Pakistan Institute of China Studies at Sargodha University, said China is waiting for the next elections in Pakistan in 2023.
