Pakistan facing difficulty in repaying Chinese debt of $1.98 Billion

at 8:55 pm
Representative Pic of Pakistan-China relations.

Islamabad: Pakistan is facing a difficulty in repaying a debt of whopping Rs 550 billion ($1.98 billion) to China’s Independent Power Producers (IPPs) and this is hampering further Chinese funding for other critical projects, including under CPEC, according to a media report.

The media report, quoting “sources” in the Pakistan government, said the country has not been even able to keep up with the timely repayment schedule, committed under the ‘revolving funding’ system.

“These non-payments and the Chinese demand for special energy tariffs for SEZs have hampered some of the major projects and investments in Special Economic Zones (SEZs),” said the report in Dawn newspaper.

It said the Chinese financial institutions require a “comfort zone” to extend further cooperation to Pakistan in critical projects and for this, repayment of the outstanding dues is critical.

The urgent clearance of this outstanding amount is necessary to provide confidence to Chinese financiers about the sincerity and capacity of Pakistan to repay the loans.

Because of Islamabad’s inability to repay the amount which has gone up to Rs 550 billion, the 13th meeting of the Joint Coordination Committee (JCC) of China-Pakistan Economic Corridor (CPEC) is not being scheduled.

And interestingly, the Chinese side has insisted that the 13th JCC should be followed by a visit by Pakistan Prime Minister Shehbaz Sharif to Beijing so that “outstanding issues are settled and the roadmap for cooperation under CPEC-2 is finalised”.

The newspaper reported that Pakistan’s Planning Minister Ahsan Iqbal, who is also the Co-Chair of the JCC along with his Chinese counterpart, has been holding back-to-back meetings with officials of the ministries and agencies concerned over the past few weeks.

He has also held meetings with “three dozen Chinese business representatives”, the report said.

One of the meetings was the Cabinet Committee on Chinese Investment Projects (CCoCIP), during which deliberations centred on the “overdue issues concerning the CPEC-IPPs, which pose a significant impediment to financial closure of key projects”, the report said.