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WASHINGTON: A bipartisan group of 16 US senators urged the Trump administration to block the International Monetary Fund (IMF) from bailing out the countries that have obtained loans from China under its infrastructure development plan.
The letter to Secretary of State Michael Pompeo and Treasury Secretary Steve Mnuchin mentions Pakistan, Sri Lanka and Djibouti among the countries that have accepted billions of dollars in loans from China but are unable to repay.
The loans come from the $8 trillion Belt and Road Initiative (BRI) that China says is meant to develop infrastructure in friendly countries for linking them to global trade routes.
But US senators disagree.
“We write to express our concern over bailout requests to the IMF by countries who have accepted predatory Chinese infrastructure financing,” the 16 senators said in the letter they sent to the two secretaries earlier this week. They claimed that China was using the debt to control the policies of the borrowing nations.
The IMF is an international lending institution and the United States is its largest contributor with some $164 billion in financial commitments. In 2016, the IMF agreed to pay Sri Lanka a $1.5 billion bailout loan to cover debts the country owes China.
Recently, reports in the international media claimed that Pakistan may soon seek up to $12 billion from the IMF to overcome a widening foreign exchange deficit.
But media reports claimed that Pakistan may use that money to repay the loans it borrowed for the China Pakistan Economic Corridor (CPEC), which is linked to the BRI. Pakistan rejected the claim, saying that it had no intention of using IMF money for repaying China.
But Secretary Pompeo told CNBC news channel last week that Washington was watching. “Make no mistake, we will be watching what the IMF does. There’s no rationale for IMF tax dollars — and associated with that, American dollars that are part of the IMF funding - for those to go to bail out Chinese bond holders or China itself,” he said.
Published in Dawn, August 10th, 2018
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Comments (95) Closed
Aug 10, 2018 09:54am
If Mr. Ishaq Dar's statement in the National Assembly about $200 billion deposited by Pakistanis in Swiss banks is to be trusted then as a starter the new government must immediately explore possibilities to recover this money .
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Aug 10, 2018 11:02am
Expect nothing good for Pakistan in the coming times from the USA. The sooner we understand that the better for us.
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Aug 10, 2018 01:31pm
Looks like each and every department of UN is controlled by US.
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Aug 10, 2018 01:47pm
We must immediately establish a National Savings, Foreign Exchange section and offer good investment incentives with tax exemption for 5 years to the Pakistanis abroad. It would be a big game changer and slap in the face of IMF and its US masters.
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Aug 10, 2018 02:04pm
World should understand IMF is a tool to cripple economy of a country and control it. Whoever took loan from IMF return it in.the first place then u can grow otherwise forget growth !
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Aug 10, 2018 02:04pm
Sir , if what USA feels comes true, then it is quite a smart game played by China to help its own economy by first lending money to OROB participants and then as a solution to recover its loans, forcing the debtors to borrow from IMF to pay back to China loans. The US seems to have seen through this game only because it deals more with China on economic matters. Indeed, very smart of China leaders.
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Aug 10, 2018 02:09pm
Go do it. In the end.. America will break and lose out like EU has.
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Aug 10, 2018 02:12pm
Guess battle lines are being drawn.
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Aug 10, 2018 02:31pm
This is the joke of the century: "They [the US Senators] claimed that China was using the debt to control the policies of the borrowing nations."
And IMF lends money to countries for what purpose exactly?
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Aug 10, 2018 02:34pm
Interesting...
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Aug 10, 2018 02:39pm
They will do all in their power to stop the CPEC route to become functional as it will make Pakistan independent of their blackmail tactics. It will also enable China to boost its trade both ways from Africa and the western Asian countries.
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Aug 10, 2018 02:53pm
China under the circumstances should widraw most of its fund in IMF, lend to the countries struggling to pay by restructuring their debt with same interest rate as IMF. Best policy under the circumstances.
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Aug 10, 2018 02:57pm
shutdown their routes through pakistan or better yet charge them a hell of a lot more.
If trump says unfair unfair. Shut down the route completely.
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Aug 10, 2018 03:10pm
The transparency in all PMLN lead govt projects gas remained in question whether it be CPEC, LNG, Orange train or any other project. USA has raised a valid point and all projects details should be open.
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Aug 10, 2018 03:22pm
@Amir Ali Khan
The actual figure is 2 trillion dollars in Swiss banks that belongs to Pakistan.
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Aug 10, 2018 03:30pm
China's investment is in trouble
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Aug 10, 2018 03:38pm
On which unfavourable terms were those credits accepted by former inept government? Is that infrastructure to benefit Pakistan or China in the first place?.
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Aug 10, 2018 03:38pm
This bailout is inevitable for Pakistan. Whether you like it or not the IK administration will first visit the States to get this money to run the business of the government. The bet is on...
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Aug 10, 2018 03:38pm
@Saif - IMF is not part of the UN. It is a separate body.
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Aug 10, 2018 03:42pm
Parliament needs to debate whether US is an ally or a for. It is behaving like an enemy
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Aug 10, 2018 03:43pm
Excellent move
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Aug 10, 2018 03:43pm
It will help Pakistan to end reliance on IMF. In short term we need to explore options other than IMF. In medium to long term we need to enhance exports n investment, and reduce imports, along with other fundamental corrections.
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Aug 10, 2018 03:52pm
@Saif Zulfiqar
Do you ever had doubt?
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Aug 10, 2018 04:06pm
how domestic law is going to affect an international body?
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Aug 10, 2018 04:23pm
This goes to prove that usa has never been our friend.
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Aug 10, 2018 04:23pm
US should not corner Pakistan in every matter. US still has a huge mess to clear in Afghanistan and for that they need Pakistan's support. This aggressive policy of US against Pakistan may backfire on them at some point in future.
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Aug 10, 2018 04:29pm
@Zak you r in fools paradise as still you believe usa is pak friend...
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Aug 10, 2018 04:31pm
It is not far that no country will go to IMF for loans because alternatives are available.
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Aug 10, 2018 04:41pm
Right action by US Senators.If China is serious in supporting allies and their development why does it not finance the projects through the Asian Infrastructure Investment Bank which is controlled by China only.
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Aug 10, 2018 04:42pm
What else can you expect from the bipartisan senators of a country totally controlled by the Hindu-Jewish lobbies, who covertly and overtly contribute billions of dollars towards their election and re-election campaign funds?
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Aug 10, 2018 05:00pm
IMF has no choice except to give out loans. as long as they can get paid back. Pakistan has not defaulted and financially has well positioned for future. However, Pakistan should continue to explore other sources so that Trump and company know that US does not have a monopoly and complete say in these matters. US senators are trying to destroy the mandate of IMF.
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Aug 10, 2018 05:00pm
It is said when US sneezes , the world catches the cold. We are seeing this happen, these days.
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Aug 10, 2018 05:02pm
Only one comment
Abolish IMF.
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Aug 10, 2018 05:17pm
A great move indeed.
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Aug 10, 2018 05:32pm
@Riaz Ahmad China is a relatively minor player in the IMF. The withdrawal of China's contribution will not affect the IMF's working. And if China really wanted to ease the interest rate burden on countries to which it has lent, it would have lent at lower interest rates in the first place.
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Aug 10, 2018 05:33pm
@Amir Ali Khan Can we start with recovering Mr Dar's illegally obtained money?
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Aug 10, 2018 05:43pm
@Amir Ali Khan :
It can only be recovered if found out that, first it was illegal and second, it went out of Pakistan.
Not every penny from any Pakistani kept out of Pakistan or in Swiss Banks can be attacked.
We should keep our hopes on foreign accounts of Pakistan national a bit low. It is a long process.
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Aug 10, 2018 05:46pm
@Atif the figure is 200 trillion
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Aug 10, 2018 05:54pm
US wants to be the only able to control other countries financially.
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Aug 10, 2018 06:15pm
@M. Saeed Why would an external investor want to lose his money. Look at the Turkish Lira today ? It has crashed.
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Aug 10, 2018 06:56pm
There we go again. In other words China is using IMF to fund its One Belt One Road Initiative. Clever and the world has wisened up.
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Aug 10, 2018 07:13pm
Good we don’t need IMF trap
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Aug 10, 2018 07:15pm
Looks like Imran Khan lost the toss and the other team is hitting sixes and fours!
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Aug 10, 2018 07:28pm
@SMI isn't that true of every loan? Or are u used to loans where they give u a loan followed by another loan to pay of first ?
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Aug 10, 2018 07:39pm
With friends like these, who needs enemies?
US has repeatedly back-stabbed, let down and disappointed Pakistan, It is time for a new approach and radically different makeup of our relationship with the US.
Trust deficit is not helping either. We have to make some hard choices if we want to keep depending on the US for our military hardware and intelligence sharing. The US only knows how to use Pakistan, with nominal promises of aid or assitance and then forgets about us and betrays us when it is critical for Pakistan.
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Aug 10, 2018 07:42pm
If one conisders how Russia became food self-sufficient and how Iran managed to stay afloat and even expand her influence around the region - despite curshing sanctions against both countries over the years, this may be a blessing in disguise for Pakistan.
By depriving Pakistan of IMF loans, US may in fact force Pakistan to look internally to reduce imports, increase foreign case reserves and get rid of the menace of debt.
Wait and watch when the new team takes over. They may yet surprise everyone with innovative methods of managing the country's financial affairs.
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Aug 10, 2018 07:43pm
If FBR, Supreme Court, and our new PM Imran Khan forcefully bring all the corruption money back to Pakistan than we don't have to ask for a bailout package from IMF or USA ever again.
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Aug 10, 2018 07:54pm
Pakistan is already in trap ..debt trap!! Like it or not?
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Aug 10, 2018 07:56pm
The way things are going it is possible that US imports of Pakistani goods will be the next target. Even EU countries will be coaxed into reducing imports from Pakistan. One thing for sure China cannot help pakistan by importing all that goods.
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Aug 10, 2018 08:00pm
Only 16 out of 100 senators, this shouldn't be major news. The statements said so far were for Trumps's "America First" base. The Pentagon would disagree since they need Pakistan in Afghanistan.
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Aug 10, 2018 08:18pm
Good news for Pakistan. USA under the leadership of Trump is now transparent and publicly tell what their policy is. People of Pakistan knew for a long time who their real friends are but now it has been made clear. I hope our rulers will u understand as well.
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Aug 10, 2018 09:00pm
@Dr BN Anand : Not very smart if the move is understood by others.
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Aug 10, 2018 09:03pm
@Riaz Ahmad Or China can provide loans at market rates that are affordable or provide loans like the Japanese loan to India for the bullet train. CPEC helps China strategically much more than Pakistan..
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Aug 10, 2018 09:13pm
Block the NATO supplies or $5,000.00 for each containers. Also block air corridor.
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Aug 10, 2018 09:37pm
Looks like Mike Pompeo needs to be reminds that USA itself is indebted to China by around 1.2 Trillion Dollars...
China needs to pull the debt card with USA, as China has the power with the ownership of US treasury bills to bring down the economy of USA.
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Aug 10, 2018 09:59pm
@Amir Ali Khan that is only possible if USA and EU cooperate.
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Aug 10, 2018 10:06pm
Of all the options mentioned here... No one has said that Pakistan needs to renegotiate deals with China. I wonder why.
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Aug 10, 2018 10:06pm
The US is 100% right and why should the IMF rescue chinese debts but China get a good name at the cost of IMF?
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Aug 10, 2018 10:09pm
For first time, we are seeing a US government putting really great thoughts on all aspects. Hats off to the Trump administration.
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Aug 10, 2018 10:09pm
@Saif Zulfiqar IMF is not an UN agency. IMF was established as a post world war economic reform at brettonwood with aim to help the post war rebuilding and economic development by the western world led by USA.The very same system that China is fighting against...
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Aug 10, 2018 10:32pm
Doesn't the United States owe BILLIONS of dollars to China?
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Aug 10, 2018 11:17pm
@Tiger If such money exist
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Aug 10, 2018 11:23pm
A dicey pitch awaits Imran Khan.
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Aug 11, 2018 12:03am
Should have happened a lot earlier.
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Aug 11, 2018 02:25am
@Alex And then the US media wonder why the public has such a low opinion of US.
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Aug 11, 2018 02:40am
@mshan and the other sources are??
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Aug 11, 2018 02:42am
This will be good for Pakistan in long run
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Aug 11, 2018 02:45am
@Riaz Ahmad China will never do this.
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Aug 11, 2018 03:34am
Russian, Chinese, Turkish, Saudi, Iranian ambassadors have visited IK and offered teade, loans and financial help. US kind of feeling left out. They must do more.
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Aug 11, 2018 03:45am
The US should tread carefully for it will lose the help of such a long lasting ally such as Pakistan. A country which the US has repeatedly used to do its bidding. Seems like the Pakistani people and rest of the world is slowly becoming fed up of the double game routinely played by the US.
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Aug 11, 2018 05:48am
This shows how good America or IMF is good for the world. They are selfish. China has guts to break from these goons.
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Aug 11, 2018 05:49am
Awesome news. Good job.
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Aug 11, 2018 05:52am
The most time tested unreliable ally, USA, the sooner we do away with America, the better for us.
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Aug 11, 2018 05:55am
Can we please review the transit route provided to USA to Afghanistan for peanuts ?
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Aug 11, 2018 06:00am
@Nick block with what. American supplied weapons?
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Aug 11, 2018 06:09am
@Riaz Ahmad wishful thinking yeh!
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Aug 11, 2018 06:39am
How long will it take to understand difference between friend and for.
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Aug 11, 2018 07:05am
USA is an enemy of all those countries, who have good relations with China. This act is absurd and unacceptable. USA is no good to any country, which has good relations with China. Lenders like IMF, World bank, ADB are tools to destroy the economies and for this reason Islam teaches us to refrain from obtaining loans. Old leaderships are responsible for looting money and destroying the country. It is high time to stand firm on feet and say Good bye to those lenders. Wish IK and his team has guts to do so.... high expectations.
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Aug 11, 2018 07:48am
@Saif Zulfiqar with due respect America funds UN about 80% as such they make the rules.
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Aug 11, 2018 07:50am
@Dr BN Anand you cannot take loans from IMF or that matter any financial Institution to pay off existing loans. On personal level this applies to Credit Cards also,
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Aug 11, 2018 08:39am
US interference in IMF will further create polarization, and nations which are bilateral friends of China, will in fact be push towards Chinese Camp, and will become allies. IMF never offer free lunch to any nation. This institution after all get profit on leanding. It’s now too late, the whole of Asia, Africa, Latin America has now influenced by China, and continous rise in offing. Even Canada and EU flooded by Chinese products. US itself is in debt of China. Pak has ability to bear all situations, and once the CPEC got fully operational it will not need any fundings.The new government of Imran Khan will take corrective measures, and economy will revive
that’s imminent.
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Aug 11, 2018 09:26am
@Saif Zulfiqar IMF is not part of UN.
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Aug 11, 2018 11:29am
Good for Pakistan, since this will force Pakistan to take measures towards fiscal independence.
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Aug 11, 2018 02:37pm
True face and friendship of US
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Aug 11, 2018 03:47pm
Hyprocrasy at its best USA!
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Aug 11, 2018 04:03pm
@Saif Zulfiqar ofcourse they are biggest contributor..
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Aug 11, 2018 04:14pm
@ABE , we need to understand why there is a resistance of US or IMF for China loans.
A. The terms in loans are not shared publicly which creates doubt about the intentions.
B. It has been a common practice used by China in Africa to aquire commercial rights in liu of non payments.
C. China does not support democracy and the decision of people.
If Pakistan make the China agreenent public., they will not face problem with IMF.
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Aug 11, 2018 04:43pm
@Shazia Nice words. Suggest action plan please
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Aug 11, 2018 07:01pm
Pakistan should stop unnecessary imports from China which is causing about 8 billion dollars deficit.
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Aug 11, 2018 07:22pm
I am positive that China with $3 trillion reserves is going to help it's friend Pakistan in these trying times.
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Aug 11, 2018 09:01pm
americans want nothing to do with pak..democrat/repub/independents..Nothing.
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Aug 11, 2018 09:06pm
@junaid As Trump is going around increasing tarrifs, we too can increase tarrifs on transit route for US supplies to Afghanistan.
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Aug 12, 2018 03:23am
@Dr. Salaria, Aamir Ahmad, You forgot to mention the biggest group, Christians!!.
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Aug 12, 2018 06:16am
@Alpha Then why should we even think about going to IMF if we know this?
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Aug 12, 2018 06:36am
Pakistan is higly indebted to China
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