 "China more important than IMF? Why Pak PM postponed Budget to visit Beijing")
Pakistan's government reportedly postponed the announcement of its Budget in order to schedule Pakistani Prime Minister Shehbaz Sharif's five-day visit to China starting June 4, with the ostensible aim of garnering investments.
PM Sharif was slated to join the formal launch of the second phase of the China-Pakistan Economic Corridor (CPEC-II) during his ongoing China visit, Pakistani media had earlier reported. However, doubts have emerged over whether China is actually gearing up for another round of major investments in Pakistan, especially through a substantial revival of CPEC.
PM Sharif's China visit also comes at a time when the Pakistani government reportedly faces formidable challenges on the economic front — from negotiating with bilateral lenders to managing financial market sentiments.
In his June 6 piece for Pakistani publication Dawn, Khurram Husain says that such a trip could have waited till after the Budget, presenting which is critical before an International Monetary Fund (IMF) deal can be finalised.
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According to Husain, Sharif's trip even took precedence over Pakistan's National Economic Council, which is necessary to finalise the country's economic survey and then prepare the next Budget's targets.
The IMF and Pakistan are in discussions for a new loan programme after Islamabad completed a short-term $3 billion programme, which helped it stave off a sovereign debt default, in April.
Why has Shehbaz Sharif really gone to China?
The stated goal of Pakistani PM Shehbaz Sharif's China visit, which includes a large delegation of businessmen and cabinet ministers, is to try and secure investment deals.
While Husain concedes that the Budget could wait till the middle of June, he adds that the Pakistani government might have priorities that it needs to sort out before drawing up the Budget.
According to his piece in the Dawn, Pakistan needs to arrange rollover commitments from bilateral partners for all the loans maturing during the period of the prospective IMF programme.
Husain says that this could perhaps be the real agenda of Sharif's China visit and also why it has taken priority over the Budget.
In his May 30 piece for Dawn, titled 'The great CPEC mirage', Husain had argued that the real aim of Sharif's visit to China was to ensure that some of the maturities in the Chinese debt instruments that would be maturing in the next three years were rescheduled.
The reason behind such a possible move would be that the IMF, which does not want its resources to be used to service Chinese debt obligations, has told Pakistan that an agreement would only be possible if there was no positive net outflow from Pakistan to China during the programme period.
Sharif’s China visit also comes at a time when Pakistan is facing a debt crisis.
According to State Bank of Pakistan data, the country's external debt ballooned to about $130 billion in 2023, double of where it stood in 2015. And, Chinese debt accounts for 13 per cent of Pakistan's total foreign debt.