Pakistan cannot take a break. The IMF will not grant loans to “cancel the debt”. China will not launch CPEC
New Delhi: The International Monetary Fund has reportedly asked Pakistan to renegotiate energy deals with China under which the former is supposed to pay more than 300 billion Pakistani rupees to several Chinese companies operating in the country.
Debt-ridden Pakistan and the IMF are engaged in tough talks in Doha over the remaining $3 billion of an existing loan program.
The request comes after Beijing refused to renegotiate the terms of agreements for projects under the China-Pakistan Economic Corridor (CPEC), reported The Express Grandstand. According to the report, the IMF suspected Chinese IPPs of overcharging Pakistan, thus pushing for the need to reopen these deals.
More than 30 Chinese companies are operating under CPEC in several infrastructure projects in various fields such as power, communications, railways, roads and highways to facilitate trade connectivity.
During the virtual talks held on Wednesday, the IMF had expressed concern over Pakistan’s repayment arrears to Chinese IPPs, The news reported. This came after Pakistani Prime Minister Shehbaz Sharif on Monday approved the immediate release of PKR 50 billion to Chinese IPPs as the first installment for the total outstanding dues of PKR 340 billion to secure fuel supplies.
The IMF reportedly asked about the repayment schedule for this account.
Read also : How Pakistan’s economy was in the fast lane for 30 years, but its engine kept overheating due to debt
IMF, Pakistan and CPEC
It was because of IMF objections that the Pakistani government did not directly paid China’s IPPs last week and instead released PKR50 billion for the power division as part of general grant applications for July. The electricity division then made the payment to the Chinese IPPs and a few others to deal with their “cash shortage”, which led the IMF to ask Pakistan to provide the list of power plants that received the amount.
The actions of the global lender put Pakistan in a difficult position to address Chinese concerns over the slowdown in CPEC projects over the past four years. China has been trying to get the multi-billion dollar initiative back on track.
In Pakistan, 11 Chinese IPPs invested $10.2 billion to produce 5,320 megawatts, but nearly 2,000 MW of power plants were shut down last month due to a coal shortage. In addition, the power plants threatened to stop operations if royalties of PKR 340 billion were not cleared immediately. This led Prime Minister Sharif to call a meeting with the CEOs of Chinese companies working on CPEC projects.
Chinese officials complained at the meeting that work remained nearly halted on CPEC projects. The prime minister then issued various orders on the spot to resolve the issues, saying Pakistan looks to China for support in all walks of life to ensure sustainable development, The news reported.
The IMF has lent Pakistan money 22 times over the past 60 years and they all come with certain conditions – the strictest being to record details of Chinese financial expenditures in the CPEC and give firm assurances that the Pakistan will not divert IMF loans to service it. Chinese debts.
Meanwhile, IMF Resident Director Esther Perez Ruiz had described ongoing talks on the ongoing seventh review with Pakistani authorities as “constructive”, even as Islamabad makes its final efforts to reconcile with the lender. global.
Columnist Javed Hassan criticized the IMF. “We cannot accept that @IMFNews /@imf_pakistan would require Pakistan to renegotiate CPEC contracts. While one would believe that the Fund would want to be aware of all CPEC-related liabilities, one imagines that it is not within its mandate to dictate such requirements,” Hassan said. tweeted.
Political science professor Adnan Rasool called it a non-starter, saying CPEC agreements under the Belt and Road Initiative fall under China’s judicial system with special courts.
This is a non-starter. Because CPEC agreements under the BRI fall under the Chinese judicial system with special courts.
I explained some of this in my recent article. https://t.co/JcDbSxFqG4#Pakistan better have a solid strategy for thishttps://t.co/TOqINe8TeZ
—Adnan Rasool (@adnanrasool) June 9, 2022
(Edited by Prashant)