Loans given to Pakistan under CPEC at commercial rates: report
Sep 30, 2021
Islamabad [Pakistan], September 30 : A major portion of Chinese financing under the China-Pakistan Economic Corridor (CPEC) consists of loans that are at or near commercial rates as opposed to grants, according to a report.
The findings are part of a report published by AidData, an international development research lab based at the College of William and Mary in Virginia.
The report said Chinese loans under CPEC constitute 95.2 per cent and 73 per cent of total commitments in energy and transport sectors, Dawn newspaper added. It said that China has committed USD 34.4 billion in development finance to Pakistan between 2000-2017.
The interest rate is 3.76 per cent for an average loan with 13.2 years' maturity (when full repayment with interest is due) and 4.3 years of the grace period, the newspaper report added.
This comes as China's highly touted BRI seems to be losing its sheen everywhere, as various issues including work at slow pace and terror attacks slow down the CPEC progress.
Beijing is much concerned about the CPEC, which is the centrepiece of the BRI. The sluggish pace of work, frequent terror attacks, and incidences of corruption have slowed it down, Hong Kong Post reported.
According to AidData report, China's BRI has left scores of lower- and middle-income countries (LMIC) saddled with "hidden debts" totalling USD 385 billion. It said China has used debt rather than aid to establish a dominant position in the international development finance market.
The report has analysed more than 13,000 aid and debt-financed projects worth over USD 843 billion across 165 countries. According to AidData, over 40 LMIC now have levels of debt exposure to China higher than 10 per cent of their national gross domestic product.
The number of "mega-projects"--financed with loans worth USD 500 million or more--approved each year tripled during the first five years of BRI implementation.
Despite larger loans and expanded loan portfolios, BRI has not led to any major changes in the sectoral or geographical composition of China's overseas development finance program, the report said.
