Pompeo’s Warning To IMF: Pakistan May Not Be Able To Take Loans From IMF To Pay Back China

In an interview to CNBC Television, US Secretary of State Mike Pompeo warned against any bailout from International Monetary Fund (IMF) to Pakistan that would be used to payoff Chinese loans, Reuters has reported.

“Make no mistake. We will be watching what the IMF does. 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,” Pompeo told CNBC Television.

Pakistan has $5 billion loans from China and its banks. It is also seeking $1 billion loans to stabilise its falling foreign currency reserves. The new Pakistan government will be facing an economic crisis once enters office. According to Bloomberg, Pakistan’s foreign exchange are at $9.1 billion, which is insufficient to pay for its imports and maintain stability of its currency.

The $57 billion China-Pakistan Corridor which has lead to Chinese imports has worsened Pakistan’s Current Account Deficit in recent times. United States’ warning to IMF is bad news for those hoping for a recovery of Pakistani economy.