ISLAMABAD: China is investing $62 billion in Pakistan through the China-Pakistan Economic Corridor (CPEC) as part of its Belt and Road initiative, which the government and public believe as a game-changer for the country’s destiny and senior government officials frequently speak highly of at local and international fora.
During the last five years since its advent in Pakistan, CPEC has enabled the country to avert its energy crisis, besides building an elaborate network of roads and other infrastructure in its various parts. With increasing energy and diminishing distances, not only the lifestyle of people has changed, but economic activity also got a phenomenal boost.
With rapid progress being made in Pakistan through CPEC, several inimical voices started terming the multi-billion dollar project a “debt-trap” for Pakistan, which will prove a back-breaking burden on the country‘s economy.
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Negating the misleading comments, Noor Ahmed, secretary of the Economic Affairs Division of Pakistan, told Xinhua that the country‘s total foreign debt is about $106 billion and Chinese loan accounts for a mere 10 to 11 per cent of the total foreign debt, whereas the remaining 89-90 per cent is from other sources IMF, Paris Club, and other western organisations.
“China has remained great support for Pakistan and always came to its rescue during the tough economic crisis. Through CPEC, China is building infrastructure in Pakistan to save its economy and to build its infrastructure, some of the money coming in the country is purely an investment, some are an interest-free loan, and other is on very easy and simple terms. If China lends money to Pakistan at one of the lowest interest rates in the world, how can it be a debt-trap?”
China has provided loans to Pakistan, and at the same time invested in Pakistan, and has planned to invest more in the next phase of CPEC, a win-win situation for both as with peace and economic stability in Pakistan, China will also benefit, he added.
Clapping back at CPEC critics, the Ministry of Planning Development and Reform said in a statement last year that China stepped forward to support Pakistan‘s development at a time when foreign investment had dried up, and economic activities were being crippled by energy shortages and infrastructure gaps.
“CPEC-related government loans have an interest rate of only 2 per cent and a repayment period of 20-25 years, and repayment of debt will begin in 2021. CPEC is not imposing any immediate burden with respect to loans repayment and energy sector outflows. All debt-related outflows will be outweighed by the resultant benefits of the investments to the Pakistan economy,” the statement read.
Referring to China’s developmental project, the statement added that the infrastructure sector is being developed through interest-free or government concessional loans. Gwadar Port is a grant-based investment, which means the Government of Pakistan does not have to pay back the investment amount for the development of the port.
Before CPEC, Pakistan was facing the worst energy crisis of its history. The project’s early harvest phase has enabled Pakistan to avert the energy crisis by electricity generation from the country’s very own resources including coal and solar energy.
Not only local, but foreign rating and economic organizations also see CPEC is a great benefit for Pakistan, rather than a debt trap. World’s leading rating agency Moody’s said that ongoing implementation of CPEC projects is likely to contribute 9 to 10 percent of Pakistan‘s GDP in the fiscal year 2018-2019.
Another international audit, consulting, advisory, and tax services agency Deloitte said that CPEC would add up to 2.5 percentage points to the country’s growth rate. Xinhua
(This news/article originally appeared in The Express Tribune on May 27th, 2019)