current affairs MCQ #6957

Why does Pakistan's inclusion of CPEC debt repayments complicate IMF debt sustainability analysis under the 2024 EFF?

current affairs MCQ #6957

  1. Question 1

    Q1. Why does Pakistan's inclusion of CPEC debt repayments complicate IMF debt sustainability analysis under the 2024 EFF?

    • A) IMF does not recognize bilateral Chinese debt in its debt sustainability models
    • B) CPEC debt is denominated in yuan which IMF cannot assess
    • C) China has refused to provide debt data to the IMF about CPEC financing
    • D) CPEC-related IPP (Independent Power Producer) capacity payments create long-term contingent liabilities that interact with circular debt, complicating the true fiscal deficit calculation

    Answer: CPEC-related IPP (Independent Power Producer) capacity payments create long-term contingent liabilities that interact with circular debt, complicating the true fiscal deficit calculation

    Explanation: CPEC-related Independent Power Producer (IPP) capacity payments create long-term off-balance-sheet contingent liabilities that interact with the circular debt problem, making it difficult for IMF models to accurately assess Pakistan's true fiscal deficit and debt sustainability.