Pakistan’s all-weather and time-tested friend China has guaranteed financial backing to Islamabad as Imran Khan-led new government looks to avoid having to go to the IMF to solve its foreign exchange crisis, reported Financial Times.
Senior members of Mr Khan’s Pakistan Tehreek-e-Insaf party have told the Financial Times they have been assured they will get further loans from Beijing over the coming months as one way to keep their currency stocks topped up. Chinese state-backed banks have lent Pakistan more than $5bn in the past financial year as Islamabad has become increasingly reliant on its northern neighbour to secure its finances.
One prospective cabinet minister told the FT: “China has promised to continue helping Pakistan overcome the crunch on foreign payments.” Another senior party leader said: “The Chinese have signalled their intent to keep helping Pakistan avoid a crisis, a default.” But he added that Chinese officials have urged their Pakistani counterparts “to take steps to reduce the large deficit”.
One finance ministry official told the FT: “Clearly, we mustn’t put all our eggs in the IMF basket. At least for the sake of argument, our future plans should also include a back-up which is built on Chinese money.”