Pakistan guarantees IMF to obtain concessions over China's CPEC energy deals

In an effort to revive its crisis-hit economy, Pakistan has guaranteed the International Monetary Fund (IMF) that it will work to obtain concessions from China-Pakistan Economic Corridor (CPEC) power plants. According to a report by The Express Tribune, the concessions may take the form of either a decrease in investment profit rates or a deferment of loan repayments. However, it is doubtful that the controversy surrounding the reopening of the purchase agreements for the power production facilities built as part of the multi-billion-dollar CPEC will go away very soon, ANI reported.  

Pakistani officials have promised to ask Chinese businessmen for concessions in a bid to get rid of one of the obstacles standing in their way of finalising a staff-level agreement with the IMF, The Express Tribune reported, citing government sources. 

It is pertinent to note that the political sensitivity involved in the process makes the possibility of such happening minimal, ANI reported. Besides this, similar promises were also made to the World Bank (WB) by the previous Imran Khan-led PTI regime in June of last year in exchange for a USD 400 million loan. 

Since CPEC is the flagship project of the Chinese government's Belt and Road Initiative, the Chinese leadership has previously ruled out the idea of revisiting these agreements. 

IMF reaches Staff-Level agreement with Pakistan

Meanwhile, after obtaining the staff-level agreement earlier this week, the IMF stated that Pakistan would get $1.7 billion in tranches over the next three to six weeks.  

Gerry Rice, the IMF's director of communication, stated during a news conference on Thursday, "It is an agreement on a combined seventh and eighth review of the programme… that will translate into about USD 1.17 million being disbursed to Pakistan. Pretty much, straight away,” ANI reported. He added that this raised the sum of IMF payments made to Pakistan for the current program to around USD 4.2 billion. 

On Wednesday, an agreement between the IMF and Pakistan regarding the combined seventh and eighth reviews for a $6 billion Extended Fund Facility (EFF) lending facility was achieved at the staff level. 

Pakistan anticipates that by signing this deal, its economy would be stabilised and its currency would strengthen. IMF also thought that it would reduce Pakistan's high inflation and put an end to its political unrest. 

In addition to this, in the month of June, Pakistan signed a loan facility deal with China for $2.3 billion. Following the loss of foreign reserves and the currency's wild fall, an agreement was reached with a group of Chinese banks. The loan is anticipated to help the cash-strapped economy and allow Islamabad to pay for necessary imports. 

(Image: Facebook/ Main Shehbaz Sharif/ AP)