October 12, 2018: The Ministry of Planning has said that the Western media’s recent reports regarding China Pakistan Economic Corridor (CPEC) are based on incorrect information, distorted facts and one-sided opinions of individuals.
“It is hereby clarified that China Pakistan Economic Corridor (CPEC) is a flagship and most active project of Belt and Road Initiative where 22 projects of worth $ 28 billion have been actualized over the past 4 years,” he added.
The project could not be compared with Chinese overseas investment in Sri Lanka or Malaysia as frameworks and financial modes of CPEC are altogether different in nature.
CPEC finances are divided in government to government loans, investment and grants.
Infrastructure sector is being developed through interest free or government concessional loans.
Gwadar Port is grant-based or investment which means the Government of Pakistan does not have to pay back the invested amount for the development of the port.
Energy projects are being executed under Independent Power Producers (IPPs) mode and finances are mainly taken by the private companies from China Development Bank and China Exim Bank against their own balance sheets, therefore, any debt would be borne by the Chinese investors instead of any obligation on part of the Pakistani government. Pakistan has opted for Chinese investment under CPEC due to the favorable financing arrangements, the press release added.
China stepped forward to support Pakistan’s development at a time when foreign investment had dried up, and economic activities were being crippled by energy shortages and infrastructure gaps.
Therefore, CPEC is not imposing any immediate burden with respect to loans repayment and energy sector outflows, he remarked.
CPEC outflows would start from the year 2021 and spread over 20 to 25 years with a maximum in the year 2024 and 2025. The resultant benefits of these investments to the Pakistan economy would far outweigh these outflows.
CPEC has provided enormous opportunities for Pakistan to grow economically and has also facilitated in overcoming crucial energy, transport infrastructure and supply chain bottlenecks. It is an engine for economic growth and is expected to increase Pakistan’s GDP growth by 2% to 3%.
Under CPEC, development of Gwadar would ensure strengthening of maritime sector particularly the coastal tourism and local fishery industry thereby benefitting the local communities.
Pakistan has repeatedly stated that it is fully committed to CPEC, which enjoys complete consensus among all institutions and political forces in Pakistan. It is a key to the future of Pakistan’s socio-economic development.
Within the broad parameters of the already approved CPEC framework, the present government, with mutual consultation of Govt. of China is broadening the base and expedite pace of CPEC. A mechanism is being developed to include third party participation in CPEC.
Socio-economic development and poverty alleviation are being included in CPEC and a separate working group is being established to fast track this dimension of the mega project.
Gwadar continues as prioritized and being developed as standalone project and a transshipment hub based on blue economy principles. Industrialization under CPEC has already been fast-tracked and 04 SEZs would hit the ground soon.
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