Pakistan seeks big loan from China for CPEC project

Despite bleak economy, Pakistan has decided to take USD 2.7 billion loan from China. The is required for the construction of package-I of the Mainline-1 project of China Pakistan Economic Corridor (CPEC). Under the ML-1 project, the 1,872 km railway track from Peshawar to Karachi will be upgrade to dual line. According to the Pakistan's daily The  Express Tribune this development comes even as Pakistan’s economy has been teetering on the verge of bankruptcy for some time and the Covid-19 pandemic has made the situation even worse.

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,” the sources told the Pakistan daily.

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. The 278-page report by the “Committee for Power Sector Audit, Circular Debt Reservation, and Future RoadMap” listed malpractices to the tune of 100 billion Pakistani rupees (USD625 million) in the independent power generating sector, with at least a third of it relating to Chinese projects.