The Financial Express
By Farooq Wani
Pakistan has the habit of intentionally creating controversies in order to divert public attention from its own failures. Just last week, Esther Perez Ruiz, who is IMF’s Resident Representative to Pakistan was forced to speak out and clear the air on Islamabad’s “posturing on several key matters”. She told the media that there is no truth in Pakistan Finance Minister Ishaq Dar’s statement that the IMF has asked Islamabad to compromise on its nuclear programme if it wants funds. Ruiz also rejected the Shehbaz Sharif government’s contention that the IMF has agreed to introducing a cross-subsidy on petrol under which the ‘rich’ will pay Rs100 more per litre of fuel and the ‘poor’ Rs 100 less.
Also Read: China rolls over $2 billion loan to Pakistan as it struggles with external liquidity
The Shehbaz Sharif government is in a tight spot- the IMF wants that the countries which had pledged monetary support to Pakistan “should actually complete and materialize those commitments,” but the same is not happening. According to sources in the know of things, Saudi Arabia (which has bailed out Pakistan on several occasions in the past), has now refused to provide any further interest-free loans to it until Islamabad signs a deal with the IMF.
While China (which accounts for approximately 30 percent of Pakistan’s debt), will provide a USD 1.3 billion loan to Islamabad through the Industrial and Commercial Bank of China, sources say that this loan will attract an interest of 4 percent. This is four times more than the lending rates of international lending bodies. This goes to prove that Beijing’s so-called ‘sweeter than honey’ friendship with Islamabad isn’t as ‘sweet’ today, as it may have been in the past.
Besides earning a massive profit on the money being loaned to Islamabad, Beijing has two other solid reasons to extend conditional financial assistance to Islamabad. Firstly, as it has the maximum financial exposure in Pakistan, an IMF bailout for Islamabad is in China’s interests to ensure that its capital in Pakistan isn’t wiped out in case it collapses financially. Secondly, providing financial relief (even at exorbitant interest rates) enables Beijing to gain an even tighter control over Islamabad. This is evident from the fact that CPEC is currently progressing, not as per Islamabad’s aspirations, but in accordance with Beijing’s unilateral diktats!
For both China and Pakistan, it’s a catch-22 situation. Beijing’s independent power plants (IPP) cannot import coal due to low availability of foreign exchange with Pakistani banks, and Islamabad can’t help to overcome this problem through local purchase as domestic rates in Pakistan are higher than that of imported coal. To add to this financial quagmire, IPPs maintain that they can’t compare prices due to exchange rate fluctuation and rupee devaluation, which despite being a weak excuse is something that Islamabad dare not contest for obvious reasons.
Special Assistant to the Prime Minister (SAPM) (Coordination) Syed Tariq Fatemi has disclosed that China’s Charge d’ Affaires Pang Chunxue had raised Beijing’s concerns over the CPEC power projects. By stating that “Overdue payments to the Chinese IPPs currently stand at $1.5 billion,” and mentioning, “This is causing huge concern among Chinese businesses,” Fatemi has made it clear that Sino-Pak ‘sweeter than honey’ relationship is definitely under very serious stress! The irony is that even though the electricity tariff charged by Chinese IIPs are exorbitant, but instead of addressing this crucial issue, Islamabad is more worried that non-payment of dues “is causing huge concern among Chinese businesses”.
Having been ‘rescued’ a record 22 times by the IMF, it’s apparent that Pakistan seems to have not only taken it for granted, but is also under the false impression that it can obtain loans from this organisation on its own terms. The IMF may have financially bailed out Pakistan in the past without ensuring that it exercises fiscal prudence. However, this time the IMF has rightly decided to ensure that Islamabad is made more accountable before disbursing the loan. The IMF message for Pakistan is clear- there are no free lunches!
Also Read: Understanding Pakistan’s ongoing crises: An analysis of the interconnected factors
Under such trying circumstances, Islamabad’s decision to send a military delegation to New Delhi for attending a SCO meet on defence chaired by India in New Delhi, though surprising, is most welcome as well as long overdue. However, whether this initiative leads to a more comprehensive and meaningful dialogue between India and Pakistan remains to be seen. Given Pakistan’s precarious financial condition, doing so is most definitely in its national interests and should it take a step forward, New Delhi would certainly walk the extra mile to normalise relations.
However, having created an extremely menacing anti-India mindset amongst its people through institutionalised indoctrination, the chances that Islamabad will agree to mend fences with New Delhi is quite doubtful. Even if it decides to do so, the Pakistan army, for its own self-serving interests, will surely torpedo any attempts at rapprochement- it did so by starting the Kargil War in 1999, when Indian Prime Minister Atal Bihari Bajpayee and his Pakistani counterpart Nawa Sharif were in the process of establishing cordial relations, and hence, there’s no reason why it won’t do so again!
The author is Editor Brighter Kashmir, Author, TV commentator, political analyst and columnist. Email:farooqwani61@yahoo.co.in
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