BEIJING: With Pakistan plunging into its worst ever economic crisis with the possibility of defaulting on foreign debt, China on Monday said Islamabad’s biggest debtor China appreciated the steps taken by its “all-weather friend” to deal with the disastrous situation. supported and hoped that he would do so. , finally, pull through. Pakistan’s current account deficit narrowed by 90.2 per cent to $0.24 billion in January from $2.47 billion in the same month last year, according to data shared by the State Bank of Pakistan (SBP) on Monday. Balance of payments crisis that has brought the country to the brink of default.
The Dawn newspaper reported on Monday that the deficit had decreased by 16.55 per cent compared to December’s $0.29 billion. The deficit was recorded as import restrictions continue amid a balance of payments crisis that has brought the country to the brink of default.
Analysts say that Pakistan’s economic crisis is coming close to Sri Lanka’s economic crisis and perhaps after this the deep debt African country is becoming a crisis of sorts for China as it has criticized many loans, which Many have criticized the violent nature and demanded it be written off. This could have consequences for slowing Beijing’s economy.
Cash-strapped Pakistan was optimistic that China would not allow it to go down the Sri Lankan path of declaring complete bankruptcy. According to International Monetary Fund (IMF) data, China accounts for about USD 30 billion of Pakistan’s USD 126 billion in total external debt.
This is more than three times its IMF loan (USD 7.8 billion) and more than the combined borrowing of the World Bank and the Asian Development Bank, Dawn reported.
Pakistan’s Defense Minister Khawaja Asif said in a shocking comment on Sunday that Pakistan has already made mistakes. He said, “You must have known that Pakistan is going bankrupt or defaulting. It has already happened. We are living in a bankrupt country.”
Asked about its reaction to Asif’s remarks, the Chinese Foreign Ministry, in a written reply to PTI here, said China sympathizes with Pakistan. It said, “As an all-time strategic cooperative partner and “firm” friend, China sympathizes with Pakistan’s current difficulties and supports Pakistan in taking proactive measures to deal with them.”
“China is and will continue to firmly promote China-Pakistan mutually beneficial cooperation and provide all necessary support for Pakistan to achieve stability and sustainable development”, it said but gave no details.
“We believe that Pakistan will be able to overcome difficulties and achieve stable economic and social development”, it said.
China is already confused about how to support Sri Lanka, which has already defaulted on its USD 51 billion external debt, which includes 20 per cent of China’s debt.
After India, last month issued a letter to the IMF giving necessary assurances to Sri Lanka to receive a US$2.9 billion bailout package, China’s Exim Bank issued a letter giving Colombo a two-year moratorium on repayment and agreed to the Extended Fund Facility of the IMF. (EFF) amid suspicions that this may not be enough to secure a loan for him.
On Monday, Chinese Foreign Ministry spokesman Wang Wenbin told the media here that the Export-Import Bank of China has said in its letter to the IMF that it is going to provide an extension on debt service due in 2022 and 2023.
This means that ‘Sri Lankans will not have to pay principal and interest on the bank’s loans during the above period, helping to relieve Sri Lanka’s short-term debt repayment pressure’, he said.
Meanwhile, Exim Bank would like to hold friendly consultations with Sri Lanka regarding the medium and long-term debt treatment in this window period and will do its best to contribute to Sri Lanka’s debt stability, Wang said.
“China will continue to actively work with relevant financial institutions for debt remediation and jointly with relevant countries and international financial institutions will play a positive role in helping Sri Lanka deal with the situation,” he added.