Is China the Key to Pakistan's Financial Freedom?

Islamabad is facing significant challenges in repaying loans and projects under the China-Pakistan Economic Corridor, Kamran Khan, the Editor-in-Chief and President of Dunya Media Group, stated on a national TV show.

He said, "Only China has the power to set the country free" from the debt trap.

Khan also pointed out that the CPEC energy projects are highly overpriced, delivering some of the world's most expensive electricity to Pakistan and the financial terms have turned the country's debt burden into a national security crisis.

Examining the Narratives

However, Pakistan, falling into a CPEC trap is not true, Khalid Mahmood, Ex-Secretary of PC-CPEC Pakistan, & CEO of Pak-China Huazi Green Energy company, told Sputnik India. This perception has been created by anti-Pakistan China lobbies, which are motivated by their own geopolitical interest, he stated.

"Under [the] CPEC policy framework, there are three ways to provide financing facilities regarding different projects: Grants, FDIs and Project Financing at the rate of approximately 2%. On the basis of these financial models, there are no indicators that support that Pakistan has economic issues due to Chinese project financing," the CEO contended.

He further explained that Foreign Direct Investments (FDIs) are crucial for all power projects. However, Chinese companies are encountering challenges due to inadequate contracts and a lack of special economic zones. The Chinese government is fully informed about the issues that Pakistan is currently grappling with.

"Both nations have a very bright past, and are dependent upon each other for geopolitical and economic reasons. There may be brief ups and downs, but it won't at anyway compromise future ties," the ex-Secretary underscored.

What's Really Behind Pakistan's Debt Trap?

In this regard, during an interview with Sputnik India Syed Ali Zia Jaffery, Deputy Director, Center for Security, Strategy & Policy Research, told that Pakistan has a gargantuan debt problem, with CPEC just being a small part of it, and I do not think the debt-trap refrain is the right one in the context of Sino-Pak relations and the CPEC.

"This inertia, I must stress, cannot be attributed to China. Therefore, owing to the absence of meaningful and efficient reforms, CPEC will not be able to deliver the promised dividends for Pakistan. More worryingly, however, due to unremitting political and economic crises, Islamabad's agency with regard to taking CPEC forward will erode," Jaffery expressed.

He further elaborated that if the project is implemented in a timely and proper manner, it will greatly help Pakistan's fledgling economy recover. As for the nation's economic instability, it is a product of an unwillingness to carry out structural reforms, including in the energy sector.

"Beijing has not pressured Islamabad to join CPEC. If anything, Pakistan has been a keen proponent of the overarching concept as it is in line with its broader vision of regional connectivity," he concluded.

Explainers

Pakistan & China Renew Commitment to Next Phase of CPEC Despite Challenges

25 June, 20:52