Having a hard time in facing financial crisis, Pakistan still has to deal with debts and the US. As a result, the country has to halt its Belt and Road projects.
The China-Pakistan Economic Corridor (CPEC) began in 2014. With the cost of approximately US$ 60 billion, the program aims to establish links between China’s Xinjiang Autonomous Region and Gwadar, a port city in southern Pakistan.
What is unfortunate is that the Phase-1 of the projects, which should have finished last year, is yet to finish. Phase-1 of the projects is pertaining to the improvement of the port in Gwadar, Pakistan.
Hassan Daud Butt, CPEC project director for the Pakistani government, opined that this delay will negatively affect the beginning of Phase-2 projects, which are setting up special economic zones and industrial estates. According to the country’s plan, the zones should be running by 2020.
“There can’t be any progress with China. Even Beijing knows that CPEC is on hold at the moment. The U.S. doesn’t want China’s influence to grow, … control of our economy is in the hands of the U.S. and its affiliated institutions (such as the International Monetary Fund and the World Bank),” said Kaiser Bengali, an economist and former policy adviser to the Sindh provincial government.
To date, the ongoing trade war has been harming the plan of the country to continue its projects since China cannot freely exports their products anymore. However, that is not the sole reason as Pakistan also has a huge debt.
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Pakistan and Debts
According to Nikkei Asian Review, Pakistan’s total public external liabilities stood at US$ 85.4 billion in March, IMF reported in July. The State Bank of Pakistan puts the total at US$ 106 billion.
From the disclosed amount, one-fourth of which was from China. Also, the State Bank of Pakistan stated that the country borrowed US$ 16 billion and 42% of that, or US$ 6.7 billion, was from China. In addition, Pakistani government also approached IMF to acquire US$ 6 billion bailout.
As the debt keeps getting bigger, Pakistan has to delay its project. Having not enough funds to continue the projects and to finance its policy, Pakistan is truly facing a hard time. With this in mind, Pakistan can no longer depend on debts as IMF has prevented the country to do so.
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