China using debt to control policies of countries like Pakistan: US senators

As many as 16 senators have expressed their strong reservations about IMF possibly giving bailout packages which could then be used to repay China.

US senators have sought to block any bailout package from the International Monetary Fund for countries who have taken sizeable loans from China. These include Pakistan, Sri Lanka and Djibouti.

Highlighting that China is using 'predatory financing' to dictate policies of these countries, many American senators have predicted that money from the IMF would be used to repay China. "We write to express our concern over bailout requests to the IMF by countries who have accepted predatory Chinese infrastructure financing,” a letter to Secretary of State Michael Pompeo and Treasury Secretary Steve Mnuchin reads. It has been signed by 16 senators.

These senators have said that while China maintains the loans given to countries like Pakistan are a part of Belt and Road Initiative, they are in fact tactics to control domestic and international policies of the same countries.

Pompeo himself had previously said that American dollars from IMF should not be given away so that countries can repay Chinese debts. The US is one of the biggest contributors to IMF.

A denial of a bailout package can be especially detrimental for Pakistan, a country currently suffering from severe economic woes. It is estimated that once Imran Khan officially takes over as PM, his government could seek loans worth $12 billion. It is suspected that most - if not all - could be used to repay China. Islamabad has rejected this outrightly.

If the bailout package is denied to Pakistan, the country may then turn towards China for more loans and possibly even look at Saudi Arabia for financial help.