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foreign

Pakistan is not getting a bailout at

least not yet the country is on the

brink of bankruptcy the only way to

avoid it is to get money from the IMF

the international monetary fund it's the

lender of The Last Resort but for the

moment it is not lending any money to

Pakistan the bailout talks have failed

these talks had been on for 10 days for

10 days and IMF team was in Pakistan's

capital Islamabad today they've left

without handing Pakistan the bailout

they need

how much money did they want Pakistan

wants 1.1 billion dollars from the IMF

and they need this money immediately

Pakistan by the way was already on a

bailout program Islamabad wants to

revive an old 6.5 billion dollar package

but it has failed to reach a deal with

the IMF

what happened the negotiations are

stalled

but the story is not about that it's

about the humiliation of Pakistan it's

about a country's political leadership

being brought to its knees Pakistan is

begging the IMF for funds but the lender

refuses to budge why because it does not

trust Pakistan anymore so the IMF has

put some very tough conditions for

giving a bailout I'll tell you about the

conditions but first just to give you a

sense of how serious Pakistan's

predicament is

let me quote for the Prime Minister

Shabbat Sharif said last week

our economic challenge is unimaginable

the conditions we will have to agree to

with the IMF are Beyond imagination

but we will have to agree with the

conditions

so what are these conditions let's bring

you the Inside Story why can't Pakistan

get the bailout it needs fundamentally

this is about trust the IMF does not

trust Pakistan and who can blame them

this is Pakistan's bailout number 23

this country is the most frequent and by

all accounts the worst borrower Pakistan

has sought more bailouts than any other

country in the world that should tell

you something

think of the situation like approaching

a bank if you have a steady income if

you pay your emis on time and have a

good record you'll easily get the loan

that you want but what happens when you

have a poor credit history when your

records show that you're a Serial

defaulter what happens then when you

have a large pile of debt plus you don't

have the money to repay it the bank will

not go easy on you it will ask you to

put up more collateral or worse

it will not give you any loans at all

that's the juncture at which Pakistan is

it is on the brink of a sovereign

default

the IMF is not sure about giving

Pakistan a loan so it's making tough

demands what kind of Demands I have a

list increase electricity and gas rates

and firm commitments from bilateral

partners

here the IMF is talking about countries

which have lent money to Pakistan the

bilateral Partners countries like Saudi

Arabia the UAE China what kind of

assurances does the does the

international monetary fund need broadly

two things first easier terms on

existing loans and second more loans

because borrowing from the IMF is not

going to be enough

Pakistan will not be able to meet its

expenses just with the money that it

gets from the international monetary

fund

so it needs to borrow more

it must figure out where the rest of the

money will come from

here's how that would work out that

could work out reports say Saudi Arabia

could step up as of May 2022 Saudi

Arabia had given Pakistan 4.2 billion

dollars in assistance 4.2 billion Riyadh

could now give an additional loan of two

billion dollars

it is said to be looking into the

possibility the UAE gave a two billion

dollar loan earlier now it would give

another one billion dollars

or so the reports say Pakistan has also

made an appeal to China it has made two

requests an additional loan of 1.5

billion dollars

and the rollover of existing debt

will China come through though we'll get

to that in a bit for the moment I'm

going to go back to that IMF review the

lender does not have a great impression

of Pakistan and I'm not the one saying

this the Pakistani presses

look at some of the reportage

this is the express Tribune and I'm

quoting due to a credibility crisis the

IMF was not willing to blindly trust

Pakistan this time and has set many

prior conditions

next we have the Dawn and this is what

they say the fund which is the IMF

was however still not confident about

external financing commitments

particularly from the friendly countries

Saudi Arabia the UAE and China besides

some other multilateral funding

just look at the choice of words in the

Pakistani press credibility of Crisis

lack of confidence

we're talking about a sovereign country

here

lending money to a government is

supposed to be the most secure

investment or among the best

but that's clearly not the case with

Pakistan

the writing is on the wall for Pakistan

it is caught between the devil and the

deep blue sea their only hope the

bailout deal is not dead

the IMF says some progress has been made

but Islamabad needs to do more

listen to what the international

monetary fund has said and I'm quoting

again the timely and decisive

implementation of these policies along

with Resolute financial support from

official partners are critical for

Pakistan so Pakistan needs to First

implement the demands

then come back to the IMF

another meeting is scheduled for Monday

I am confirming that we have got the

memorandum of Financial and economic

policies at 9am this morning as per

their commitment we will completely go

through it over the weekend and we will

have virtual meeting with them on Monday

God willing we will try to complete the

IMF program for the second time in

Pakistan's history with the same Spirit

we have completed this process keeping

in view The Sovereign commitment

Pakistan must show progress to get this

bailout

but before that

they have to deal with an even more

urgent problem

China

is proving to be a nightmare for

Pakistan it is Pakistan's biggest

bilateral creditor Pakistan owes China

30 billion dollars you could say China

accounts for a big part of the debt

that Pakistan is buried under

but Islamabad now wants the debt to be

rolled over

will Beijing play ball highly unlikely

they yet to commit to the debt

restructuring and without that Pakistan

won't be able to sustain

so why isn't China doing it why is China

dealing debt relief to Pakistan

it seems Beijing is cutting its losses

do you remember the blackouts from last

month a power outage affected the entire

country all of Pakistan almost 220

million people they were without

electricity

do you know why that happened

why did Pakistan have to suffer this

blackout because it's National Grid went

down

and this wasn't a new problem Pakistan

has been suffering power outages for

over a year now

turns out China has a role to play there

I'll repeat that there's a Chinese hand

in Pakistan's blackouts

you may have heard of cpec cpec China

Pakistan economic corridor these are

basically Chinese projects in Pakistan

and this is an important component of

the Bri the Belton Road initiative now

the cpec has many projects among them

are power projects

under cpec multiple Chinese companies

had set up plants in Pakistan power

plants many of them have shut down so

Pakistan's existing facilities are

overburdened they're struggling to keep

up with the demand how many plans were

shut down well we don't have the exact

number but as of November last year 20

plants were shut

why did the Chinese power companies

leave because Pakistan refuses to pay

them Chinese companies erode one and a

half billion dollars Pakistan hasn't

been able to settle these dues no bills

no power that's how it's working

so much for being iron Brothers

the debt is rusting the iron

China seems to have put projects in

Pakistan on the back burner I have some

numbers from last year in 2022 China's

investment in cpec fell funding was cut

by 56 percent and this is not a one-off

case this is a trend Chinese investments

in Pakistan have been steadily falling

let's look at some more data in 2020

Pakistan got almost 155 million dollars

from China 155 million in 2021 the

investment fell to around 77 million

dollars a drop of almost 50 percent

so why is China putting less money into

Pakistan because cpec projects have

failed to take off in 2021 the Chinese

Ambassador began to complain the chair

of a parliamentary committee revealed

his grievances listen to what was said

the Chinese Ambassador has complained to

me that you've destroyed cpec and that

no work was done in the past three years

you have destroyed cpec that's what he

said today China faces an economic

crisis of its own

the Wuhan virus has broken the back of

the Chinese economy and Beijing is

reluctant to give out any debt relief

take the case of Sri Lanka China is yet

to sign on Sri Lanka's IMF bailout

last year the world's poorest countries

faced debt payments worth 35 billion

dollars

more than 40 percent of this was owed to

China

40 of this debt again Beijing dragged

its heels the West has come down hard on

China it says China and I'm quoting

China is a main obstacle to moving ahead

with debt restructuring agreements

Pakistan 2 is beginning to complain or

at least see the problem it wants to

reduce Chinese debt Pakistan wants China

to reconsider a railway project the

Karachi Peshawar Railway line it was

supposed to be upgraded the agreement

was reached in November last year but

Pakistan can no longer afford the

project it wants China to give a 40

discount on the bill

the value of the project was almost 10

billion dollars a 40 discount would mean

a discount of 4 billion dollars

will Beijing agree to this

well Pakistan is yet to make a formal

request

it can see that the Chinese debt is

killing its economy and China can see

that money invested in Pakistan is money

lost

we sympathize with neither we say they

deserve each other