World News | IMF wake-up call to Pakistan: New CPEC investments pose risk to debt sustainability

Islamabad [Pakistan]Sep 4 (ANI): The International Monetary Fund (IMF) has reiterated that any new investment in China-Pakistan Economic Corridor (CPEC) projects could pose a risk to Pakistan’s debt sustainability, according to media reports.

The IMF sounded the alarm in its Public and External Debt Sustainability Analysis report which was released after the approval of the Extended Financing Facility (EFF) program for Pakistan. With EEF approval, the cash-strapped country is expected to receive the 7th and 8th tranches of $1.17 billion in aid.

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“In early 2022, new investments through the China-Pakistan Economic Corridor (CPEC), initially established in 2013, were announced. Although the infrastructure of these second-phase investments may improve growth prospects, the contingent liabilities that also pose a risk to debt sustainability,” reads the report, reports The News International.

He said Pakistan’s public debt continues to be judged with greater uncertainty, in part because fiscal easing in fiscal year 22H2 prevented the reduction in the debt ratio expected by the time of the sixth. review.

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The debt-to-GDP ratio is now expected to fall from 77.9% at the end of FY21 to 78.9% at the end of FY22 before falling to around 60% by the end of FY2019. 27, assuming adjustment efforts under the EFF. program are fully executed.

“Higher interest rates, a larger than expected slowdown in growth due to policy tightening, exchange rate pressures, further policy shifts, slower medium-term growth and Contingent liabilities related to state-owned enterprises pose significant risks to debt sustainability,” the IMF warned. .

As the International Monetary Fund (IMF) endorsed Pakistan’s stimulus package to stabilize the country’s economy, Prime Minister Shahbaz Sharif said it “is not an end in itself”. Taking to Twitter, the prime minister said reviving the IMF program is a path towards reorienting Pakistan’s economy.

“Reviving the IMF program, while essential for our economy, is not an end in itself. It offers a pathway to reorient our economy. We will have to work hard to make it self-sufficient. , which is only possible through structural reforms,” he said.

Pakistan’s economy is large and deep, and its geostrategic position is strong enough to avoid default, experts told VOA.

Despite several differences, Washington “still supports lending through the IMF because a crisis on the Afghan border is not something the United States wants to see,” said Tamanna Salikuddin, director of South Asia programs at the American Institute for Peace. (ANI)

(This is an unedited and auto-generated story from syndicated newsfeed, LatestLY staff may not have edited or edited the body of the content)

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