The faltering economy and the monetary policies pursued by Pakistan currently render the nation incapable of paying back loans and Independent Power Producers (IPP) projects launched under the China-Pakistan Economic Corridor (CPEC). The administration has always put a blind eye towards the matter, stated Kamran Khan, the President and Editor-in-Chief of a Pakistani news media said.
In a debate session with Khalid Manzoor, the Former Special Assistant to the Prime Minister of Pakistan on CPEC and Shabbar Zaidi, the former Chairman of the Federal Board of Revenue (FBR), mentioned Pakistan is now locked in CPEC Debt trap and only China has the key to set us free.
Today, Pakistan’s IPP under the CPEC offer a classic example of a debt trap. According to his statement during the Pakistani media news debate, “The Creditor country extends extensive credit to a debtor country with the intention of extracting economic or political concessions when the debtor country becomes unable to meet its repayment obligations. The conditions of the loans are not publicised. The borrowed money commonly pays for contactors and materials sourced from the creditor country.”
His statement also mentioned that highly over invoiced, non-competitive CPEC power projects with a promised minimum of 17 percent dollarized profits have delivered the world’s most expensive electricity to Pakistani people and industries. Capacity payments and the 3.5 percent and 3.5 percent London Interbank Offer Rate loan terms have turned Pakistan’s burden into a fully-fledged national security crisis and now classic outcome of an intelligently laid debt trap. Pakistan just can’t pay financial charges and now China has a critical say in our economic destiny.
Merely asking loan from international bodies is not enough, Pakistan needs to find out a way by which it can pay back the debt extended by the CPEC. In the debate, Khan questioned Mansoor, “Why did we not enquire that loans that we are getting from China are not on the market price and not over invoiced and was Pakistan capable of paying the questioned loans back when they were offered?”
Answering the same, Mansoor said, “We did not make any adequate policies for China, as making polices is the job of the government. We were supposed to get investment to set up industries, if these industries had been set up it could have enabled us to pay back the loans. But all this didn’t happen at all.
Taking the same issue even further, Shabbar Zaidi, the former chairman of the FBR said, “Since day one I have been the person who has raised the questions over the financial viability of the CPEC. I have been the one person in Pakistan who has always said that the proposed Special Economic Zones cannot be developed and the strategy behind the CPEC is wrong and our country will not be able to return loans at 17 percent return and I have always shown my confidence the transfer pricing designed by Pakistan is wrong.”
He also added, “Tell me a single CPEC plant that has maintained proper operations in Pakistan, and we have verified the entity’s supply, He also added that the loans and projects offered under the CPEC are not a Foreign Direct Investment (FDI) but a bond that has to be paid back to China which Pakistan in its current economic conditions cannot fulfil in any way.
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