Pakistan needs to repay China more than double the amount it owes the International Monetary Fund in the next three years, as loans to boost foreign exchange reserves and bridge a financing gap, become due.
According to Aljazeera – from which this news piece is reproduced – Pakistan owes $6.7 billion in commercial loans to China over the three years through June 2022, according to the IMF, which this year approved a new program to bail out Pakistan from a crisis.
Pakistan needs to pay the multilateral lender IMF $2.8 billion in the same period.
Pakistan, one of the biggest beneficiaries of China’s Belt and Road Initiative, has been borrowing from Beijing to tide over a financial crisis. Still, the money was enough to only partly bridge a financing gap, pushing the South Asian nation to knock at the IMF’s doors.
A report last year by the Center for Global Development listed Pakistan among eight nations that face potential debt-sustainability problems because of the belt-road plan. “In a way it’s gone wrong for Pakistan,” said Burzine Waghmar, a member of the Centre for the Study of Pakistan at SOAS University of London, according to the report published by Aljazeera.
“Enthusiastically taking Chinese money, they looked at the short-term deals for shoring over the financial crisis, without realizing its medium and long-term implications and the Chinese leverage over Pakistan.” —Aljazeera