IMF Chief Economist Maurice Obstfeld has said that Pakistan has not approached the International Monetary Fund formally. Despite the economic issues going on in Pakistan, the country has not approached IMF directly.
Maurice Obstfeld said that China’s joint ventures with Pakistan especially CPEC will bring benefits & risks to Pakistan’s economy. At the IMF and World Bank annual meetings news conference in Bali, Maurice said that Pakistan is facing economic deficit due to low reserves.
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The Prime Minister Imran Khan who was hesitant to ask IMF for loans has now decided that there is no option for Pakistan except to ask for loans from IMF. If an IMF bailout package is taken it will be the second time in the last 5 years.
Obstfled said, “The government has expressed its desires to enact deep structural reforms that might break the cycle of Pakistan needing financial support from the Fund.”
Obstfled said that Pakistan needs infrastructure development and China’s role is essential in it. But he said that China’s involvement can create issues for Pakistan as well.
He said, “It is important that the design of the projects be solid and excessive debts which cannot be repaid are avoided.”
The size of the biggest Chinese Silk Road project in Pakistan has been cut. The changes are being made so that Pakistan can reanalyze the Belt and Road Initiative (BRI) projects going on in the country.
China however believes that the project has created job opportunities in Pakistan and it will benefit both the countries economically.