A top US lawmaker has said that any IMF loan to cash-strapped Pakistan cannot be just a “convenient way” to repay its debt to China which has engaged many countries in a debt trap.
Pakistan is seeking USD 8 billion from the International Monetary Fund (IMF) to bail itself out from a severe balance-of-payments crisis that threatens to cripple the country’s economy.
The US almost has a veto power in the IMF, said Democratic Congressman Brad Sherman, who in an address to a dissident Pakistani leader also said that the US aid to Pakistan which has been cut by the current Trump administration is unlikely to be restored soon.
Sherman said that last week, he has raised with the Trump administration the issue of IMF loan to Pakistan.
He spoke on this issue during a Congressional hearing with David Malpass, Under Secretary of Treasury for International Affairs.
“I’ve shared with him the concern that any IMF loan to Pakistan cannot be just a convenient way to repay China. China has engaged in a debt trap. We’ve seen it in Sri Lanka. We’re seeing it in Africa. If the Chinese do that, then China has to learn that sometimes they just don’t get repaid,” he said.
“In fact, this is beyond just South Asia, I’m working on a legislation that I would call Chinese Debt Trap Relief Act,” Sharman said, adding that the legislation would encourage countries not to repay bad loans.
“The idea that Pakistan would turn to its own people and vilify a man who helped us destroy Osama bin Laden, does not speak well of the future of US-Pakistani relations. Our aid has been cut to Pakistan. I do not think it will be restored to major levels until the Dr (Shakil) Afridi issue is dealt with,” Sherman said in his keynote address to the conference.
Dr Shakil Afridi is a Pakistani doctor serving a 33-year jail term for helping the CIA in tracking down Al-Qaeda chief Osama bin Laden to Abbottabad in 2011.
The US has been pressing Pakistan to release Dr Afridi, who was involved in a CIA-linked plan to find bin Laden with a fake vaccination operation in the Pakistani garrison city.
Sherman, who is on the financial services committee, said the US should simply instruct American banks and more importantly, American bond rating agencies to say that if there’s a default on a debt, but that debt is part of a Chinese debt trap, it just doesn’t count.
And then turn to the Chinese and say that it is not going to be able to use western financial institutions to penalise countries who fall into their debt traps.
“So if China wants to make these loans, fine. If they don’t get repaid, that’s their business and countries will be then free to engage in other financial transactions with countries hopefully that do not engage in such traps,” Sherman said.
In his address to the conference, organised under the banner of South Asians Against Terrorism and for Human Rights (SAATH), and co-hosted by US-based columnist Mohammad Taqi and Haqqani, the top American lawmaker said that US has provided Pakistan with USD 43 billion in financial assistance post-independence.
Sherman also slammed Pakistan for blocking US websites like Voice of America inside the country.