Targeting China’s friends
Stepping into the shoes of their un-predictable President, US senators seek to block International Monetary Fund (IMF) bail out for three countries having friendly relations with China. A bipartisan group of 16 US senators have urged the Trump Administration to block IMF from bailing out the countries that have obtained loans from China under its infrastructure development plan. The letter to the Secretary of State Michael Pompeo and treasury Secretary Steve Munchen mentions Pakistan, Srilanka and Djibouti among the countries that have accepted billions of dollars of loans from China but are unable to repay.
The loans come from $ 8 trillion Belt and Road Initiative (BRI) that China says is meant to develop infrastructure in developing countries for linking them to global trade routs. But there is no iota of doubt the BRI will solely benefit China and its industries, if relocated to nine special economic zones in Pakistan along with Chinese engineers and skilled workers, because Pakistan’s industries are not competitive due to their second generation technological base and less skilled working force.
The United State must not forget that these costly loans were obtained by former Prime Minister Nawaz Sharif, who was disqualified and convicted on corruption charges. He was the blue eyed guy of President Bill Clinton Administration and it is against the principles of justice that 220 million people of Pakistan are victimized for the misdeeds of a Washington favoured corrupt and ousted from power ruler.
The compound interest on Chinese loans is 13 percent, including insurance charges that were acquired for roads, Lahore Orange Train, Motorways, Metro Bus and health hazardous coal based energy projects by the previous PML-N government. The appalling rate of interest is irrationally higher than the one charged on the World Bank and Asian Development Bank project loans for ongoing and new development projects.
The article published on July 22, the Wall Street Journal had quoted Planning Commission Chief Economist as saying that China should rescue Pakistan with interest free loans. Otherwise “for what do we have this friendship [for]? As a belated damage control measure the Foreign Office asked the Planning Commission on August 4 to devise a “system whereby all government functionaries are barred from unauthorized comments.”A beautiful couplet from Ms Parveen Shakir (late) poetry perfectly fits in this scenario. “Bath tho such hai, Laiken bath hai roswai ki.”Translation: “It is a bare fact, but it brings disgrace.”
The government has issued an angry statement about media reports questioning the viability of CPEC and described it tantamount to fuelling skepticism. The statement appears to be in response to a few articles appeared in the international media regarding the terms on which loans have been given by China. The articles have candidly and rightly questioned the ability of Pakistan’s economy to service these loans. Ironically, for a number of years the pseudo-intellectual and lies spewing Planning and Development former Minster Ahsan Iqbal used similar language to swath away skeptical talk and all questions that were raised about CPEC but in vain. It is similarly useless for the caretaker government to resort to such indignant language.
It is note worthy the previous PPP government got IMF bail out of $ 11.3 billion and PML-N government received $ 6.2 billion. But the economy slipped down to recession and hyperinflation because these corrupt governments misappropriated the IMF loans. Pakistan still owes $ 5 billion to IMF. One may ask a pertinent question as to why the United States supported such like governments in Pakistan and eulogized those as democratic ones. Rampant corruption and economic mismanagement of the Washington favourite two previous governments has pushed the country to the verge of default and it immediately needs a financial assistance of $12 billion.
The business community has vociferously opposed the idea of knocking the door of IMF and urged the finance minister designate Asad Umar to chalk out a comprehensive economic development plans to boost trade activities inside the country and not aid since the latter foster dependency. Iftikhar Ali Malik Central Vice Chairman of United Business Group (UBG) said if the coming PTI government would follow the so called IMF Reforms Agenda, it will further deform the economy as it has always included rise in the tariff of gas and electricity, rupee devaluation, slapping taxes on agriculture and elimination of subsidies, which will result in closing down of more industries, increasing ratio of unemployment and price hike. It was the negative impact of IMF bail out of 2013 that 200 textile mills are already closed. In a private TV current affairs programme, Asad Umar hinted at reasonable reduction in the tariff of energy inputs. Hopefully, PTI government would avoid any such plan that could further fracture the economy.