The so-called debt overhang for Pakistan from its participation in the China-Pakistan Economic Corridor (CPEC), part of the ambitious Chinese Belt and Road Initiative, is overstated, according to a top official of Pakistan.
“The propaganda is not based on facts but on perception,” said Ishrat Husain, adviser to Prime Minister Imran Khan on institutional austerity and a federal Minister. He was addressing a seminar at the 52nd ADB Annual Meeting of Asian Development Bank on the topic: “Is debt sustainability a cause for concern?”
Money brought in as FDI
Reeling out numbers, Mr. Husain said that of the $45 billion total package from China under CPEC in 2015, as much as $35 billion was for financing power projects in the power-deficit country. “The Chinese government got no extra concessions, the money was brought in as FDI and commercial loans were taken by the Chinese companies. There is no loan obligation on Pakistan,” said Mr. Husain. About $6 billion was in the form a government-to-government loan at 2% interest rate, he said.
Of the total national debt of $100 billion, only $11 billion is owed to China, according to him. Pakistan’s annual investment programme, including both public and private, added up to $50 billion and the CPEC was only a small part of it, he pointed out.
“The Chinese have been very understanding and cooperative. CPEC has put us back on track and we’re determined to put our house in order,” Mr. Husain said.
BRI a natural idea
Speaking in the same panel, ADB president and chairperson Takehiko Nakao said that the BRI, of which CPEC is a part, is a very natural idea to expand the connection between East Asia, Central Asia, Europe and Africa.
“There are merits over investment but at the same time we have to be careful… we must find good projects with good returns even if the lending is to the government. Otherwise it will cause concern over repayment,” he said.