ISLAMABAD: Pakistan did not have a “China debt” problem for financing from the China-Pakistan Economic Corridor and projects related to the game-changer initiative were transparent, said Minister for Planning and Development Asad Umar, after a report by US-based research lab claimed debts of at least $385 billion owed by 165 countries to Beijing for ambitious Belt and Road Initiative.
The four-year study by AidData said the debt burdens were kept off the public balance sheets through the use of special-purpose and semi-private loans, and were “substantially larger than research institutions, credit rating agencies, or intergovernmental organisations with surveillance responsibilities previously understood”.
In a separate but related finding, AidData claimed Beijing was disproportionately lending to countries that performed poorly on conventional measures of creditworthiness, in contrast to other international lenders but demanded far higher interest rates with shorter repayment periods.
Citing the report, Asia Nikkei reported Pakistan had Chinese loans with average interest rates of 3.76 percent, compared with a typical Organisation for Economic Co-operation and Development-linked lending rate of 1.1 percent.
While the minister, who was addressing a press conference, acknowledged Pakistan had a debt servicing and debt sustainability challenge, he stressed Islamabad did “not have a China debt problem”.
The AidData report 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.
Dismissing the concerns, he said details pertaining to CPEC-related projects have been on multiple occasions shared with the public, including at the level of Parliament, he said. “There is also a parliamentary oversight on the project [in the shape of committees],” he added.
The minister clarified the debt Pakistan owed to China was only 26 percent of its total external liabilities whereas the remaining 74 percent was owed to western donors.
Umar said the terms of debt financing for power projects under the CPEC were in fact more favourable than the non-CPEC financing which the government received from other multilateral donor agencies.
He said the loans taken by the government were also at the concessional interest rate of two percent.
He said China had also provided grants to execute different CPEC-related projects. A vocational training institute has been established in Gwadar with a grant from the Chinese government.
He said fake news were propagated against the project in order to spread despondency among the people and give a wrong impression about Pakistan to the world.
The minister said most of the projects under the CPEC have been completed in a stipulated period. He said both Pakistan and China welcomed investment from other countries to facilitate CPEC projects.
He said Pakistan will support transforming the corridor into a regional project.
Speaking about Phase-II of CPEC, Umar said more jobs will generate during the second phase as investments will be made in the telecommunications, textile and agricultural sectors. Another investment in the IT sector will be made that would create thousands of jobs.
Terming the report “misleading”, CPEC Authority chief Khalid Mansoor said that in the Thar and Hub power projects, Pakistan bought equipment from General Electric, an American company, as China was “flexible”.
