Pakistan to seek $2.7 billion loan from China for CPEC construction project

At a time when financial institutions of China are reluctant in investing in the China-Pakistan economic corridor (CPEC), Pakistan has decided to seek USD 2.7 billion loan from China for the construction of package-I of the Mainline-1 project of CPEC.
As per reports, the sixth meeting of the financing committee on ML-1 project, which includes dualisation and upgrading of the 1,872 km railway track from Peshawar to Karachi, decided that Pakistan would initially request China to sanction only USD 2.73 billion in loan out of the total estimated Chinese financing of about USD 6.1 billion.
The Ministry of Economic Affairs has been directed to formally send the Letter of Intent to China next week as Beijing is expected to finalise its next year’s financing plans by the end of the current month.
“In April this year, Pakistan had shared a term sheet for Chinese loan, seeking 1 per cent interest rate. But China has not yet formally responded to the request. They said that informally Chinese authorities conveyed that the interest rate could be higher than the one mentioned in the term sheet,” according to sources.
In May, Pakistan’s former ambassador to the United States Husain Haqqani wrote in an article that Pakistan’s desire to maintain strategic relations with China has resulted in the construction of USD 62 billion worth of CPEC, which includes a set of infrastructure projects, being mired in insufficient transparency.
“China’s consistent strategic support, including help with Pakistan’s nuclear program, is often held out by Pakistan’s military establishment favorably in contrast with the more conditional Pakistani alliance with the United States. But it seems now that China is not in Pakistan to help its people but rather as a predatory economic actor”, he said.
CPEC was sold as the ultimate solution to Pakistan’s economic troubles. But, it was China that has squeezed all the benefits. This move will further impact Pakistan’s already battered economy, even as the spread of the coronavirus pandemic was contained.
However, PM Imran Khan has repeatedly highlighted the need to complete the $60-billion CPEC saying that it would push socio-economic development.

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