DAVOS: Pakistan sees little reason to fear debts arising from its massiveinfrastructure projects with China, the country’s prime minister said in aninterview on the sidelines of the annual meeting of the World EconomicForum .
Prime Minister Shahid Khaqan Abbasi noted that when it comes to theambitious China-Pakistan Economic Corridor project, an independent bodywill shoulder the loans in most cases, meaning the national debt would notnecessarily increase.
‘I don’t think it is a correct perception,’ Abbasi said of the debtconcern, speaking with the Nikkei Asian Review in Davos on Thursday. Hestressed that the corridor project has two core concepts – financialsustainability and environmental conservation. ‘All projects are basicallydone on these two principles,’ he said.
Infrastructure development in the corridor coupled with enhanced publicsecurity would help raise international trust in Pakistan, giving foreigncompanies – not just Chinese ones – the confidence to invest, the primeminister said.
Abbasi also said he expects economic benefits from more efficient powergeneration and lower-cost transportation, thanks to road improvements. Thedevelopment of Gwadar Port will also extend benefits to neighbouringcountries in Central Asia, he said.
China has positioned the corridor as a flagship project of its Belt andRoad Initiative. The plan is to build roads, railways and energyinfrastructure across Pakistan, linking Kashgar in China’s western Xinjiangregion with the Arabian Sea port of Gwadar.
The Chinese side is covering most of the estimated $62 billion cost.Beijing could conceivably use this to pressure Pakistan, especially if thecountry struggles to repay its debts.
Sri Lanka, which saw its own debts to China swell, in December grantedChinese companies a 99-year lease on the port of Hambantota by convertingdebt to equity. Some worry Pakistan will fall into a similar ‘debt trap.’
The administration of US President Donald Trump has decided to haltmilitary assistance to Pakistan, accusing the government of beinguncooperative in rooting out terrorists. Abbasi sees things differently.
‘Our position is clear,’ he said. ‘We are partners in the war againstterror. The result of the war against terror is evident. There are no safehavens for terrorists anymore.’
On Pakistan’s real economic growth for fiscal 2017, which runs throughJune, Abbasi predicted the rate will be higher than in fiscal 2016, whenthe economy expanded by 5.3 per cent – the quickest pace in 10 years.
‘Exports have increased significantly for the last six months,’ Abbasisaid. ‘Despite devaluation and an increase in oil prices, inflation remainscontrollable. We should be able to get close to six per cent.’
‘ link> link>link>CPEC link> toprovide dividends for centuries’
Abbasi said the link>link> link>CPEClink> project would provide dividends forcenturies to come in the shape of employment generation, industrial growthand connectivity.
The prime minister said consolidation of democracy in Pakistan was apositive indicator and stressed all institutions should work hand in handfor development and stability of Pakistan, said a press release issued inIslamabad.
He said Pakistan was privileged to be part of the visionary Chineseleadership’s Belt and Road Initiative.
Abbasi said the PML-N government, on assuming power, faced major challengesof law and order, terrorism, energy shortage and an under-performingeconomy. He said due to the hard work and commitment of the government, lawand order had improved considerably and restored investors’ confidence.
“I met several business leaders here in Davos and all of them expressed astrong desire to invest and expand businesses in Pakistan,” the primeminister said.
Elaborating the success achieved in eliminating terrorism, he said Pakistanhas fought the war against terrorism from its own resources with a heavytoll on human lives and substantial loss to the economy.
Pakistan had been hosting around three million Afghan refugees since longwhich was the longest and largest refuge provided anywhere around theglobe. The world must acknowledge Pakistan’s efforts and sacrifices, hesaid.
Regarding the progress made on energy front, he said Pakistan had surplusgas and overcome energy deficiency in a sustainable and efficient way. ‘Wehave diversified our energy mix and with inclusion of coal and gas insteadof expensive conventional fuels,’ the prime minister said.
Pakistan had achieved high economic growth with low inflation and it was apositive scenario augmenting greater investor confidence, he said and addedPakistan had completed 1,700 kilometres of six-lane motorways under theCPEC , a target which many developed countries found hard to achieve.
He said Gwadar Port was operational and provided world class shipment andlogistical facilities.