Chinese loan accounts for 6.3% of Pakistan's total foreign debt

Chinese loan accounts for 6.3% of Pakistan's total foreign debt

ISLAMABAD: The Chinese government soft loan for China Pakistan Economic Corridor (CPEC) projects accounts for only 6.3 percent of Pakistan's total foreign debt, said sources in Embassy of China on Monday.

Of all the CPEC projects, only KKH Phase-II, Karachi-Lahore Motorway (Sukkur-Multan), Orange Line and Laying of Optical Fiber Cable used the Chinese government soft loan, which were guaranteed by Government of Pakistan.

According to the statistics of the Ministry of Finance, Pakistan’s external debt and liabilities reached $95 billion by October 2018, whereas the total amount is around $6 billion USD.

The repayment time of the four projects starts from 2021, repaying 300 million - 400 million USD annually.

All CPEC energy projects are funded by commercial loans which are borrowed and repaid by the Chinese companies. There is no foreign debt on Pakistani government.

The sources added that during the year when CPEC was launched in 2012-13, Pakistan's GDP growth was only 3.68 percent which gradually kept on increasing and reached 5.8 percent in 2017-18.

Further, they said the CPEC not only attracted much more Chinese investment in Pakistan, but also made Pakistan a popular destination for investment and since CPEC was launched, China has become the largest investor for the last 5 years.

Ongoing implementation of CPEC projects are likely to contribute 9 percent to 10 percent of GDP in fiscal year 2018-19.

CPEC on-going infrastructure projects will promote Pakistan's North-South interconnection and help Pakistan's coastal areas strengthen ties with the northern areas, promoting the coordination and development in depth and breadth.

CPEC on-going infrastructure projects, the sources said would significantly reduce the time cost of transportation. After the completion of KKH Phase-II (Havelian-Thakot), the travel time between the two places will be reduced from 4 hours to 1.5 hours, which will promote commercial development and exchanges.

China will firmly promote bilateral industrial cooperation, expand China's direct investment in Pakistan, and encourage Chinese enterprises to actively participate in the construction of special economic zones.

Chinese side has proposed that special economic zones under CPEC industrial cooperation will provide fair access to Pakistani domestic enterprises and encourage third-party investment.

China will focus on helping Pakistan develop manufacturing and export-oriented economy and its government has encouraged Chinese companies to increase local component in their procurement in Pakistan.