SAWT BEIRUT INTERNATIONAL

| 18 June 2024, Tuesday |

U.S. concerned about debt Pakistan owes China, official says

U.S. State Department Counselor Derek Chollet said on Thursday during a visit to Islamabad as the nation battled with an economic crisis that the United States is concerned about debt owing to China by Pakistan and other nations.

Pakistan, long a staunch friend of the United States, has grown closer to China, which has given Islamabad billions in loans and is its biggest creditor. Due to ongoing debt repayment obligations, Pakistan is in a devastating economic crisis with decades-high inflation and critically low foreign exchange reserves.

“We have been very clear about our concerns not just here in Pakistan, but elsewhere all around the world about Chinese debt, or debt owed to China,” Chollet told journalists at the U.S. Embassy in Islamabad after he met with Pakistani officials.

China and Chinese commercial banks held about 30% of Pakistan’s total external debt of about $100 billion, according to a report by the International Monetary Fund released in September last year.

 

Much of that debt has come under the China-Pakistan Economic Corridor, part of Beijing’s Belt and Road Initiative.

Cholett said Washington was talking to Islamabad about the “perils” of a closer relationship with Beijing, but would not ask Pakistan to choose between the United States and China.

Relations between Islamabad and Washington had turned frosty over the war in Afghanistan, but there has been a thaw in recent months, with an increasing number of high-level visits.

Officials from China and the United States will be part of a multi-country meeting of a new sovereign debt roundtable on Friday.

G7 and multilateral lending institutions have long pushed for broad efforts to deliver debt relief to heavily indebted nations to help them avoid cuts in social services that could spur social unrest.

U.S. Treasury Secretary Janet Yellen and other G7 officials see China, now the world’s largest sovereign creditor, as a key stumbling block in debt-relief efforts.

    Source:
  • Reuters