Pakistan denies ‘China-loan’ problem amid CPEC criticism

Pakistan does not have a "China-debt" problem pertaining to loan financing from the China-Pakistan Economic Corridor (CPEC) project, the county’s Planning and Development Minister Asad Umar said, dismissing a recent report, critical of the CPEC, by a US-based International Development Research Lab

Oct 06, 2021
Image
China-Pakistan Economic Corridor (CPEC) project

Pakistan does not have a "China-debt" problem pertaining to loan financing from the China-Pakistan Economic Corridor (CPEC) project, the county’s Planning and Development Minister Asad Umar said, dismissing a recent report, critical of the CPEC, by a US-based International Development Research Lab.   

At a press conference on Wednesday, Umar acknowledged that Pakistan had a debt servicing and debt sustainability challenge but denied the “China-debt problem," saying the Chinese loans constitute only 10 percent of its total debt.  

The report had raised four main issues about CPEC: lack of transparency, imposition of secret loans on Pakistan, loans being expensive, and Pakistan's debt rising to a dangerous level because of CPEC.

He said information on CPEC projects had been shared a number of times and various committees and had even had their queries answered. "Parliamentary oversight is present over it," he was quoted as saying by Dawn newspaper.

Umar said that data on energy and power projects was available with the National Electric Power Regulatory Authority and that the government had provided information about CPEC to the International Monetary Fund at the start of its program.

"We tried to think about it (secret loans) but [only one thing] comes to our mind that maybe they are calling sovereign guarantees for any loan or project as secret or hidden debt." The report also raised the issue of secret loans. 

Sovereign guarantees, he said, were provided to all independent power producers — whether domestic or foreign — and "nothing new was created in this [and] neither is it a secret".

Defending the Chinese-funded power projects, he said the power sectors loans by China were comparatively cheaper than those from other international agencies such as the World Bank or the Asian Development Bank.

However, there are other tariffs and structural issues in these power projects that Pakistan failed to bargain with China despite several members within the government stressing on these issues. "The average rate of the government-to-government loan is less than 2 percent," he claimed, adding China also provided grants for many projects.