China is paralysing global debt-forgiveness efforts

Given that his country is on the brink, Mohammad Ishaq Dar, Pakistan’s economy minister, is strangely serene. In the week to January 20th, his government burned through a quarter of its dollar reserves, leaving $3.5bn to cover loan repayments and imports that will probably come to more than twice that in the first quarter of the year. Two days later ministers turned off the electricity grid to preserve fuel. Policymakers then abandoned a currency peg. The rupee plummeted, but Mr Ishaq Dar remained cool. Pakistan’s prosperity, he said, is in God’s hands.

Divinity usually takes the form of the imf, provider of 21 bail-outs to Pakistan since 1960, or Western governments. But the global infrastructure for dealing with irresponsible and unlucky economies is in crisis. China’s lending, growing for two decades, has reached a critical mass. Western financiers are in a stand-off with a lender too big to ignore but too irascible to involve in restructuring. Countries that have borrowed from China, and been battered by covid-19 and rising interest rates, are stuck in turmoil—few so firmly as Pakistan.