ZCZC
BCN-24
PAKISTAN-ECONOMY-CHINA-IMF
Pakistan defends its economic partnership with China
ISLAMABAD, Aug 9, 2018 (BSS/AFP) – Pakistan Wednesday defended its
economic partnership with China, amid fears that the terms of opaque multi-
billion dollar investments by Beijing could be exacerbating Islamabad’s
economic woes as it considers a fresh IMF bailout.
“We have noted recent media reports questioning the viability of China
Pakistan Economic Corridor (CPEC), claiming that it would create an
unbearable debt burden for Pakistan,” the government said in a statement
issued to the media.
“Such media reports are often one-sided, distort facts, and are based on
irresponsible statements by individuals who either have no understanding of
CPEC or are driven by ulterior motives,” the statement continued.
CPEC is an ambitious plan by Beijing to build infrastructure in Pakistan,
mainly energy and transport, connecting the western Chinese region of
Xinjiang with the Arabian Sea.
It is part of China’s massive “Belt and Road” initiative seeking to revive
ancient trade routes through a massive rail and maritime network via $1
trillion in investments across Asia and Europe.
But the opaqueness of the CPEC terms has led to concerns as Pakistan faces
a looming balance-of-payments crisis, with analysts saying it will need to
take urgent action, potentially seeking a bailout from the International
Monetary Fund (IMF).
“It is because of the favourable financing arrangements that Pakistan
opted for Chinese investment under CPEC,” said the statement, issued under
the caretaker administration currently running the country pending the
formation of a new coalition government by election winner Imran Khan.
“China stepped forward to support Pakistan’s development at a time when
foreign investment had dried up, and economic activity was being crippled by
energy shortages and infrastructure gaps,” it said, calling CPEC a “win-win”.
Chinese energy companies have “raised funds from Chinese banks and
investors”, and these do not constitute any debt obligation on Pakistan, the
statement said.
“CPEC projects are financed through a composite financing package
comprising long-term government-to-government concessional and preferential
loans, as well as grants from the government of China. Repayments on these
loans would not commence in the immediate future,” it added.
The details come after US Secretary of State Mike Pompeo voiced concerns
in July over any IMF bailout being used to repay Islamabad’s debts to China,
with whom Washington is engaged in a trade war.
On Tuesday Pakistan’s likely future finance minister Asad Umar announced
that the decision on a possible IMF loan would be taken by “the end of
September”.
“There is a general perception that we have picked up very expensive loans
from the Chinese. I personally don’t think so,” he told reporters in
Islamabad.
“They are like most commercial loans,” he said, denouncing the “lack of
transparency” by the previous government on the subject.
China’s financial largesse, in the form of the Belt and Road project, has
raised concerns over the vulnerability of poorer nations to such massive
debt.
Last year Sri Lanka was forced to hand over majority control of its
Hambantota port to China after being unable to repay its loans.
BSS/AFP/HR/1035