US urges Pakistan to seek debt relief from China

ISLAMABAD:

US Secretary of State Antony Blinken on Tuesday urged Pakistan to seek debt relief and restructuring from China, its single-largest creditor after the country has seen widespread flood-induced devastation.

At least 1,600 people have lost their lives while the estimated cost of flood damages and losses stands at a staggering $28 billion with nearly a third of the country still submerged by the deluge.

Pakistan has made similar appeals for “debt swaps for climate action” to other countries.

Read Turkey dispatches 14th plane carrying aid to flood-hit Pakistan

“I also urged our colleagues to engage China on some of the important issues of debt relief and restructure so that Pakistan can more quickly recover from the floods,” Blinken told Foreign Minister Bilawal Bhutto Zardari in Washington, according to a state department readout of the meeting.

The two officials also discussed the US flood relief, counter-terrorism cooperation and Pakistan’s relations with India.

Pakistan has to repay around $1.1 billion to the Paris Club countries. Overall Pakistan owes $10 billion to rich countries that include Japan, France, Germany, the US and others.

The country has to pay $16 billion dollars to the non-Paris Club countries. Out of that Pakistan owes $14.6 billion alone to China.

According to the international news agency Bloomberg, Pakistan owes about a third of its total external debt to its neighbouring country. Beijing has made nearly $26 billion in short and medium-term loans to Pakistan and Sri Lanka over the past five years as its overseas lending shifts from funding infrastructure toward providing emergency relief, according to AidData, a research lab at William and Mary, a university in the US.

Plans are in place for the government to speak with China after talking with the members of the so-called Paris Club, an informal group of wealthy nations that bailed out governments from Argentina to Zambia, Prime Minister Shehbaz Sharif told Bloomberg in an interview last week.

Pakistan is a flagship for China’s Belt and Road Initiative with projects worth more than $25 billion completed.

The International Monetary Fund (IMF) also cautioned Islamabad that investments in the second phase of the China-Pakistan Economic Corridor (CPEC) could raise growth prospects but the project loans could “pose a risk to debt sustainability”, it said in a report released this month.

The impact of the historic flooding became more evident by the end of August, about the same time that Pakistan secured a $1.1 billion loan from the IMF to help avert a default.

Pakistan has spoken with the Fund and World Bank about immediate debt relief as well.

The US on Tuesday announced $10 million in aid for Pakistan’s flood relief efforts in addition to the already announced assistance of $56.1 million after FM Bilawal met with US Secretary of State Anthony Blinken in Washington DC.

According to the Foreign Office spokesperson, Bilawal apprised Blinken about “the devastation caused by the cataclysmic floods with more than 33 million people displaced and a huge loss of lives and livelihoods”.

The minister also highlighted the relief efforts of the government and people of Pakistan and thanked the US government for its assistance.

US urges Pakistan to improve ties with India

Meanwhile, the US has advised Pakistan to improve ties with India while sidestepping New Delhi’s concerns over upgrade assistance for Islamabad’s F-16s.

“In our discussions today, we talked about the importance of managing a responsible relationship with India,” said Blinken.

Blinken's comments came after India's defence and foreign ministers opposed a US decision to provide a support package of about $450 million for Pakistan's fleet of US-made F-16 fighter jets.

When asked about Indian External Affairs Minister S Jaishankar calling on the US to review its warming relationship with Pakistan and criticising the authorisation of $450 million for the F-16 programme, US State Department spokesperson Ned Price reportedly said, “the relationship we have with India stands on its own; the relationship we have with Pakistan stands on its own. We also want to do everything we can to see to it that these neighbours have relations with one another that are as constructive as can be possible.’’

“We don’t view our relationship with Pakistan, and on the other hand, we don’t view our relationship with India as in relation to one another. These are both partners of ours with different points of emphasis in each, and we look to both as partners because we do have in many cases shared values, we do have in many cases shared interests,’’ he elaborated.

The Pakistan-US meeting came hours before Jaishankar met Blinken, Indian news daily The Tribune reported.

Earlier, Jaishankar had said the US-Pakistan relationship has “neither ended up serving Pakistan well nor serving the American interests’’ when asked at an open event on the first US arms package for Pakistan since 2018.

Jaishankar on Monday night had a meeting with US Defence Secretary Lloyd Austin to discuss more information-sharing and logistics cooperation to further improve operational coordination between the US and Indian militaries.

(With input from Reuters)