Pakistan to pay $6 billion loan to China under CPEC

Pakistan owes six billion dollars to China under the debt obligations of CPEC initiative, with over 20 to 25 years of payback period, as per the Pakistani planning ministry.

“Government of Pakistan’s financial liability is only to the tune of six billion dollars comprising of low interest loans and grants in infrastructure projects spread over 20 to 25 year payback period,” the ministry of planning, development and reform said in a statement, referring to China-Pakistan  Economic Corridor (CPEC) projects.

The certainly has stopped the rumors that liability of Pakistan under CPEC was 40 billion dollars.

Well, CPEC is the biggest investment by China under the Belt and Road Initiative with the corridor finances comprising of government-to-government loans, private investments and grants. Currently there are 22 projects under CPEC progressing at various stages of implementation.

The ministry also clarified that the energy projects are being executed under independent power producer’s mode and finances are mainly taken by the private companies against their own balance sheets.

“Therefore, debt would be borne by the investors instead of any obligation on part of Pakistani government,” it added.

But personly I think this is catch, Pakistan is not small country like Maldives, Sri lanka or Ecaudor, so the Chinese agenda of taking economical control of country is not going to work that easily here as it has worked in the above countries. Instead China is playing big game here, it is not just dump the government under the loan but it is targeting private sector also.

China and Pakistan has decided to broaden the scope and expenditure of pace of CPCE. And here that 6 billion dollar is not the final amount Pakistan has to pay with increasing number of projects the amount of loan is surely gonna increase and so  on the private sector.

China has established infrastructures in countries like Maldives,  Ecuador without thinking about the requirement of the project. And china is using the same strategy here also. But this time for result China will have  to wait until not only government but also the Pakistani private sector surrenderes under the heavy load of Chinese debt.