Pakstan’s Woes Continue

 

It seems to be baptism by fire for the new Pakistan Prime Minister Imran Khan. No sooner had he occupied the exalted position, he was told to fall in line on action against terrorists and terror organizations by the US administration. In fact, US Secretary of State Mike Pompeo had on the very first telephone call urged Mr. Khan to get his act together.

Last month, at the 73rd session of UN General Assembly, Indian External Affairs Minister Sushma Swaraj named and shamed Pakistan for its flip-flops on the issue of terrorism. The Indian Minister’s speech clearly indicated that New Delhi was of the firm belief that ‘terror and talks’ could not go together. Soon after this, Pakistan Foreign Minister Shah Mehmood Qureishi was snubbed by the US State Department; when Washington refused to play any role in facilitating talks between India and Pakistan. Bilateral talks with New Delhi are something that Islamabad badly wants in order to garner global support. But, this time the trick does not seem to be working.

The Financial Action Task Force (FATF), the Paris based watchdog body that looks into terror funding; too, has revealed that it is not happy with Pakistan’s actions on combating terror financing. A delegation of FATF has asked Islamabad to do more to strengthen its legal framework so that the country is not blacklisted by the body. The FATF delegation said that the institutional mechanism for combating terror financing in Pakistan are weak and the legal framework is insufficient. These are ominous signs indeed for the Imran Khan government.

No sooner the FAFT delegation’s comments became public, the International Monetary Fund (IMF) asked Pakistan to reveal with “absolute transparency” the details of Pakistan’s debts especially, the country’s debt owed to China. Pakistan is seeking a US $ 7.5 billion bailout package from the Washington based IMF.

Beijing has pumped in billions of dollars into Pakistan on the China Pakistan Economic Corridor (CPEC), that is a part of China’s ambitious ‘One Belt One Road’ (OBOR) project. The Fund Managing Director Ms. Christine Lagarde said in Bali, Indonesia such disclosures were absolutely necessary for determining the debt sustainability of countries seeking loans from the IMF.

Some analysts say that Beijing has pumped in close to US $ 60 billion on the CPEC. But, due to its’ domestic economic compulsions, Islamabad has cut its share in the project by US $ 2 billion. It is well known that Pakistan has a massive balance of payments (BoP) problem. The country’s foreign exchanges reserves are at their lowest ever. Also, this week Pakistan’s central bank devalued the Pakistani rupee by 7 percent. One US dollar is now worth 133 Paksitani rupees now!

If the IMF offers a bailout to Pakistan, it would be the 13th bailout to that country in the last thirty years. However, as the bailout talks were on between Pakistan Finance Minister Asad Umar and IMF officials, US Secretary of State Mike Pompeo said that there would be ‘no rationale’ if Pakistan pays off Chinese loans through the IMF bailout. This has the potential to put a spanner into the bailout package.

The Fund appears to be caught in a tight situation. The US is the largest contributor of resources for the IMF and has 16 per cent of the votes on the Fund’s board, but China is not far behind with 6 %, IMF cannot by its own rules refuse to lend to a member country. Ms. Lagarde cannot afford to anger either of these two countries.

Pakistan is in the process of completing some ‘prior actions’, including increase in gas and electricity rates as well as currency depreciation. IMF has indicated to Pakistani authorities to take further tough decisions, including “strengthening the performance of public sector enterprises”. These could complicate matters for the common masses of Pakistan and create more problems for Imran Khan’s government.

Script: Kaushik Roy, Air: News Analyst