As Pakistan struggles with one of its worst economic crisis in decades, China has stepped in to help the cash-strapped nation. China has approved a loan of $700 million as the International Monetary Fund (IMF) delays its decision to sanction a loan to prevent an economic meltdown in Pakistan.
The US is “deeply concerned” about China's loans to India's neighbours, including Pakistan and Sri Lanka. These may be used for coercive leverage, Donald Lu, Assistant Secretary of State for South and Central Asia, told reporters ahead of the India trip of Secretary of State Antony Blinken.
Blinken will arrive in New Delhi for a three-day official visit on March 1. Lu said that the US is talking to countries in the region comprising India to take their own decisions and not feel compelled by any outside partner. “We are talking to India, talking to countries of the region about how we help countries to make their own decisions and not decisions that might be compelled by any outside partner, including China,” Lu said.
Lu said that there has been a serious conversation between India and the US on the issue of China. "We have had serious conversations about China, both before the latest scandal over this surveillance balloon but in the aftermath. So, I fully expect those conversations will continue," he said. US-China relations have remained tense after the shooting down of the Chinese surveillance balloon over US territorial air space earlier in February.
On Friday, Pakistani Finance Minister Ishaq Dar announced that the Board of China Development Bank (CDB) has approved the loan to the country. "Formalities have been completed and the Board of China Development Bank has approved the facility of USD 700 million for Pakistan. This amount is expected to be received this week by the State Bank of Pakistan which will shore up its forex reserves!" Dar tweeted.
Pakistan has been implementing multiple measures, including a hike in power and fuel tariffs and raising taxes on luxury products and services, to meet the preconditions set by IMF. Pakistan Prime Minister Shehbaz Sharif on Friday said that the crisis-hit country has to ‘unwillingly’ accept the strict conditions of the IMF. Once the deal is signed, the lender will disburse a tranche of more than $1 billion from the $6.5 billion bailout agreed to in 2019 to Pakistan. According to reports, Pakistan is left with foreign reserves barely enough for three weeks' worth of imports.
The strict measures are likely to further cool the economy and stoke inflation, which stood at 27.5 per cent in January, Reuters reported.
