Economic crisis of Pakistan: Islamabad’s biggest debtor China on Monday said it supported the steps taken by its “all-weather friend” Pakistan to deal with the disastrous situation and hoped that it would eventually overcome it.
Seeing Pakistan sinking into worst economic crisis with prospects of non-payment of foreign debt, Beijing is closely monitoring the situation.
Pakistan on the verge of default
Pakistan’s current account deficit narrowed by 90.2 per cent to $0.24 billion in January from $2.47 billion in the same month last year, according to data shared by the State Bank of Pakistan (SBP) on Monday. Balance of payments crisis that has brought the country to the brink of default.
The Dawn newspaper reported on Monday that the deficit had decreased by 16.55 per cent compared to December’s $0.29 billion. The deficit was recorded as import restrictions continue amid a balance of payments crisis that has brought the country to the brink of default.
What did the economic expert say
Analysts say that Pakistan’s economic crisis is coming close to Sri Lanka’s economic crisis and perhaps after this the deep debt African country is becoming a crisis of sorts for China as it has criticized many loans, which Many have criticized the violent nature and demanded it be written off. Beijing’s slowing of its economy could have consequences.
hope of pakistan
Cash-strapped Pakistan was optimistic that China would not allow it to go down the Sri Lankan path of declaring complete bankruptcy.
According to International Monetary Fund (IMF) data, China accounts for about USD 30 billion of Pakistan’s USD 126 billion in total external debt.
This is more than three times its IMF loan (USD 7.8 billion) and more than the combined borrowing of the World Bank and the Asian Development Bank, Dawn reported.
Pakistan minister’s comment dashes hope
Pakistan’s Defense Minister Khawaja Asif said in a shocking comment on Sunday that Pakistan has already made mistakes.
“You must have come to know that Pakistan is going bankrupt or default or meltdown. it’s done. We are living in a bankrupt country,” he said.
Asked about its reaction to Asif’s remarks, the Chinese Foreign Ministry, in a written reply to PTI here, said China sympathizes with Pakistan.
It said, “As an all-time strategic cooperative partner and “firm” friend, China sympathizes with Pakistan’s current difficulties and supports Pakistan in taking proactive measures to deal with them.”
“China will continue to resolutely promote China-Pakistan mutually beneficial cooperation and provide all necessary assistance to Pakistan to achieve stability and sustainable development”, it said but gave no details.
“We believe that Pakistan will be able to overcome difficulties and achieve stable economic and social development”, it said.
China is already confused about how to support Sri Lanka, which has already defaulted on its USD 51 billion external debt, which includes 20 per cent of China’s debt.
After India, last month issued a letter to the IMF giving necessary assurances to Sri Lanka to receive USD 2.
9 billion bailout package, China’s Exim Bank has released a letter offering Colombo a two-year moratorium on repayment and agreed to the IMF’s Extended Fund Facility (EFF) amid doubts that it will be able to secure the loan. may not be enough.
On Monday, Chinese Foreign Ministry spokesman Wang Wenbin told the media here that the Export-Import Bank of China has said in its letter to the IMF that it is going to provide an extension on debt service due in 2022 and 2023.
This means that “Sri Lankans will not have to pay principal and interest on the bank’s loans during the above period, helping to relieve Sri Lanka’s short-term debt repayment pressure”, he said.
Meanwhile, Exim Bank would like to hold friendly consultations with Sri Lanka regarding the medium and long-term debt treatment in this window period and will do its best to contribute to Sri Lanka’s debt stability, Wang said.
“China will continue to support relevant financial institutions in actively working out the debt treatment” and will jointly work with relevant countries and international financial institutions to play a positive role in navigating the situation in Sri Lanka, he added.
(with PTI inputs)
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