US want to help Pakistan revive economy: official

According to Malpass IMF loans tend to be shorter maturity loans and China's loans to Pakistan are longer-maturity

A senior official of the US Treasury Department has said that the United States wanted to help Pakistan in reviving its economy so that it was not a failure in the future.

David Malpass, Under Secretary of Treasury for International Affairs, was part of the Congressional hearing where concerned were raised by senators regarding the IMF money being used to service the Chinese debts.

A senator referred to the Secretary of State Mike Pompeo’s last month stating that the United States of America would not allow its taxpayers’ money, which is the part of funds at IMF’s disposal to be lent upon request of countries, for Pakistan to repay its Chinese debt.

Pakistan is seeking an $8 billion extended loan facility from the International Monetary Fund (IMF) to bail itself out of a severe balance-of-payments crisis that threatens to cripple its economy. The two parties are still discussing the package and a final decision is expected early next month.

Malpass told the senators that the Trump administration also wanted to ensure that any IMF loan to Pakistan was not used to repay its Chinese debt.



“With regard to Pakistan, Secretary Pompeo is exactly right. So, we are working and making clear within the IMF that if it were going to supply any funding to Pakistan that it would not be used to repay Chinese loans,” Malpass said.

“We are trying also to make sure that Pakistan changes its economic programme so that it’s not a failure in the future. So, that’s the core of our purpose with regard to Pakistan,” he added.

During the House Financial Services Committee hearing on 'Evaluating the Effectiveness of the International Financial Institutions' Congressman Ed Royce said Pakistan is currently seeking a multibillion-dollar IMF bailout.

"In July, Secretary (of State, Mike) Pompeo said there's no rationale for IMF tax dollars and those associated with American dollars that are part of IMF funding for those to go to bail out Chinese bondholders or China itself," he said.

"We will make strong efforts, and I believe successful efforts, to make sure that what you describe doesn't happen, meaning a payoff of Beijing via Islamabad," Malpass said.

Malpass said that IMF loans tend to be shorter maturity loans and China's loans to Pakistan have been longer-maturity loans.

"So from the standpoint of that money being used, we will look for was that that roundtripping does not happen the way you described," he said.

"But important in this, is the structural reforms in Pakistan that are necessary for it to stop being such a poor country," Malpass said.