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The ongoing debate on the impact of CPEC projects on future external payments’ obligations is welcome, but should be informed by analysis based on facts rather than opinion.
The total committed amount under CPEC of $50 billion is divided into two broad categories: $35bn is allocated for energy projects while $15bn is for infrastructure, Gwadar development, industrial zones and mass transit schemes. The entire portfolio is to be completed by 2030. Therefore, the implementation schedule would determine the payments stream. Energy projects are planned for completion by 2020, but given the usual bureaucratic delays, it won’t be before 2023 that all projects are fully operational. Under the early harvest programme, 10,000 MW would be added to the national grid by 2018. Therefore, the disbursement schedule of energy projects is eight years (2015-2023). Infrastructure projects such as roads, highways, and port and airport development, amounting to $10bn, can reasonably be expected to be concluded by 2025, while the remaining projects worth $ 5bn would spill over into the 2025-30 period.
Examine: Hidden costs of CPEC
Given the above picture, it is possible to prepare a broad estimate of the additional burden on Pakistan’s external payment capacity in the coming years. As the details of each project become available, the aggregate picture can be refined further. The margin of error would not cause significant deviation.
It is possible to prepare an estimate of the additional burden on our external payments’ capacity.
The entire energy portfolio will be executed in the IPP mode —as applied to all private power producers in the country. Foreign investors’ financing comes under foreign direct investment; they are guaranteed a 17pc rate of return in dollar terms on their equity (only the equity portion, and not the entire project cost). The loans would be taken by Chinese companies, mainly from the China Development Bank and China Exim Bank, against their own balance sheets. They would service the debt from their own earnings without any obligation on the part of the Pakistani government.
Import of equipment and services from China for the projects would be shown under the current account, while the corresponding financing item would be FDI brought in by the Chinese under the capital and finance account. Therefore, where the balance of payments is concerned, there will not be any future liabilities for Pakistan.
To the extent that local material and services are used, a portion of free foreign exchange from the FDI inflows would become available. (Project sponsors would get the equivalent in rupees). For example, a highly conservative estimate is that only one-fourth of the total project cost would be spent locally and the country would benefit from an inflow of $9bn over an eight-year period, augmenting the aggregate FDI by more than $1bn annually. This amount can be used to either finance the current account deficit or reduce external borrowing requirements. Inflows for infrastructure projects for local spending would be another $4bn over 15 years.
Taking a highly generous capital structure of 60:40 debt-to-equity ratio for energy projects, the total equity investment would be $14bn. Further, assuming the extreme case that the entire equity would be financed by Chinese companies (although this is not true in the case of Hubco and Engro projects, where equity and loans are being shared by both Pakistani and Chinese partner companies) the 17pc guaranteed return on these projects would entail annual payments of $2.4bn from the current account.
CPEC’s second component, ie infrastructure, is to be financed through government-to-government loans amounting to $15bn. As announced, these loans would be concessional with 2pc interest to be repaid over a 20- to 25-year period. This amount’s debt servicing would be the Pakistan government’s obligation. Debt-servicing payments would rise by $910 million annually on account of CPEC loans (assuming a 20-year tenor). Going by these calculations, we can surmise that the additional burden on the external account should not exceed $3.5bn annually on a staggered basis depending on the project completion schedule.
As a proportion of our total foreign exchange earnings of 2016, this amounts to 7pc. These calculations do not take into account the incremental gains from GDP growth that will rise because of investment in energy and infrastructure. As the loan amounts would be disbursed in the next 15 years and repayments would be staggered, the adding of the entire $15bn to the existing stock of external debt and liabilities is not an accurate representation. The more realistic approach would be a tapered schedule, with $2bn to $3bn getting disbursed in the earlier years and slowing down in the second half.
The question is: how do we find the extra non-debt-creating resources of $3.5bn to offset this additional burden? If the export slowdown was due to energy shortages, the availability of increased supplies should boost exports fetching higher foreign exchange revenues. Exports have to grow by 14pc annually in dollar terms to compensate for these outflows if all other sources remain unchanged. This is not unprecedented as Pakistan has previously recorded this growth rate. Further, the substitution of imported fuels with domestic ones such as hydro, coal, wind and solar should be able to result in savings of at least $1bn annually. These measures will need concerted action.
To make this happen, Pakistan has to take some policy actions on a priority basis: (a) make coordinated efforts to increase the volume of exports by diversifying product mix, penetrating new markets, revising free trade agreements, reducing transaction costs; (b) attract foreign investment in manufacturing and export sectors and set up joint ventures in the industrial zones; (c) channel workers’ remittances though the banking system by reducing the differential between the open and inter-bank market rates; (d) accelerate training of skilled, technical and professional manpower who can take over jobs from the Chinese, thus bringing cost savings and reduced outflows; (e) reform the power sector by privatising DISCOs, mandating Nepra to develop competitive power markets and power exchanges by providing open access to producers for transmission and distribution, setting tariffs through open and transparent bidding, and introducing smart technologies. These measures would certainly help in easing the pressure on external accounts.
The writer is former governor of the State Bank of Pakistan.
Published in Dawn, February 11th, 2017
Comments (85) Closed
Excellent analysis. It helps understand the on going debate about CPEC loans. Our political parties should agree on some key economic projects and spare them unnecessary criticism.
Why not borrow from your own NRP s at a lower interest rate. In that case any interest paid automatically gets infused back in to Pakistani economy bringing better prosperity over all. Why pay the chinese for a road which is going to be used 80% or more for Chinese exports saving them a bunch in transportation costs? I never understood that logic.
Excellently explained, Sir Ishrat
What tax payers?
Perhaps the most detailed financial analysis of the CPEC related projects, at least at the macro level. It clearly shows the dangers of not mobilizing various resources and policies to address the anticipated needs of the projects.
There is danger in not seeing these projects through. Also expanding exports in a world where tariffs are being introduced is not going to be easy. A strong dollar weakens pakistani currency, and having to payback in dollars is not a great scenario over the long term.
Congratulations to Mr.Ishrat Hussain Sahib for writing this excellent article. The Government of Pakistan should pay special attention to training of manpower who could take over jobs from Chinese labour,systematically. How about starting technical classes in high schools for this purpose. Of course,consult the Chinese what type of skills they will need in the workforce they anticipate to employ in factories.
so basically....the same as srinlankas port that china said will give great returns..and now is empty......and now the chinese own it for the next 99 yrs ...good job
Commenting on Feb 3, 2017 Dawn article “Finance Ministers Debt Defence,” I had hoped to get a read on the financing burden of CPEC from some independent finance expert(s). Reading this article, authored by the eminent finance expert Dr. Ishrat Husain, provided much needed answers with clear assumptions. His article is provides the informed “analysis based on facts rather than opinion.”
The article concludes: “The additional burden on the external account should not exceed $3.5bn annually on a staggered basis depending on the project completion schedule.” Dr. Ishrat Husain also provided five clearly stated policy recommendations to create resources of $3.5 Billion for this additional debt servicing; coming from a person with such a high caliber experience, the recommendations appear to be pragmatic and effective. I hope that the government will make a concerted effort soon to put in motion necessary planning efforts to implement these recommendations as a priority.
What the article shows is that CPEC is a great opportunity and also a great risk for Pakistan. With the infrastructure development, improvement in power resources, Pakistan will need to finally take the many structural reforms that have been lacking as pointed out in the last paragraph - if it does then the country will be better for it. But if all this investment does is allow China to develop its western half and to flood Pakistan with cheaper goods at the expense of local industries then this will be great risk - especially given the article says exports need to grow by 14% annually to finance the investment.
So this really is a game changer - it really is sink or swim - not in the sense that China will somehow make Pakistan better - it is finally that Pakistan have to fundamentally change and help itself to reach its potential. If not - the consequences will be dire.
Pakistan is making same mistake of inviting outside merchants like Mugal king Jahangir did with British. Any external debt is very dangerous for country with low reserve of foreign currency. Pak Rupee will depreciate heavily and people of Pakistan will import inflation. It may take couple of years to happen but, it will be extremely detrimental to economy.
Indian has learned lesson during 1990-1995. What Pakistan needs is not capital, outsider help to restore economy but, big investment in capital formation, irrigation and agriculture. Land of Pakistan is one of the most fertile land in subcontinent. Support agriculture, support dairy industry and cut heavily on non-planned expenditure. More jobs will be created, lower inflation and stability in currency. This will restore faith in Pakistan. First, Pakistani foreign national will start pouring investment then neighboring countries nationals will arrive.
Good luck !!
Where would the minimum 14% growth in exports come from? Supply side is fine, what about the demand side?
Above all must have a reliable government (no again going to military rule) and eliminate terrorism without classifying. Else everything will fail
Liberalization and concerted governmental efforts in sectors like 'tourism' along with exploiting efficiencies in local productive industries may help with easing the external account burden in post-CPEC Pakistan. Great article Sir!
The Chineese company are guaranteed a 17pc rate of return in dollar terms on their equity . This sounds very high. Government-to-government loans amounting to $15bn. As announced, these loans would be concessional with 2pc interest Why the difference? Both money flows from China only, Right?
Can anybody tell me where in the world other than Pakistan, sovereign guarantees are given for FDI? This article also ignore profit taking by Chinese on loan acquired.They are not here just to pay loans only.Above all, what will be the cost of electricity in such projects?It is already two times than peers and expecting exports to remain competitive is just like living in fool's paradise.
@Gunjan
Thank you for bring it.Valid argument.
Can you write on this issue of 14%, highlighting pros and cons as the Dr. Hussain has done?
It will help us to understand better.
Thanks Dr. Hussain for writing this article.
The suggestion in the last paragraph are easier said than done. It is easy to say a) 'increase your exports' but how ? which are possible areas? and which country you will beat in terms of cost and productivity ? b) 'Attract foreign investment' how ? c) is easier d) why would China pass on jobs to Pakistan when it has its own under-developed areas? Chinese are brutally efficient and have unique work culture where you can't even take a minute extra for breaks.Which college will teach it?
The loan and financial obligations are real, rest is just talk at the moment. Leaders have nothing else to show other than CPEC, and public is ready to link everything to CPEC. It is a win win situation for everyone.
All the advantages go to China, well-played dragon.
Pakistan is taking a loan to create Infrastructure for Chinese trade. A win-win situation for China, she will get Profits and interest as well.
All this is mere eye wash. As per the article, for $35B worth of energy projects "they are guaranteed a 17pc rate of return in dollar terms ". From where will this 17% return come considering corruption and acute power theft.
Moreover, same kind of lollypop was given to Srilankans. Read about it on google. Srilanka had to surrender about 10% of it's strategic coastline to Chinese to save itself from Chinese debts.
The expected 14% growth in exports is extremely difficult if not impossible in today's circumstances.Unless Pakistan completely overhaul it's institutions, manufacturing and textile industries, this cannot be achieved.These reforms are continuous process and require sustained efforts by government.
The mountain of net public debt has reportedly touched the level of Rupees 18 trillion. Please ask anybody how many zeros in a trillion. Hardly ten percent will reply to your satisfaction. Even the interest payable on such a huge debt level has never been explained by SBP, or the ministry concerned. So, what to talk about the installments. Question: who is the incharge to take care of the utilization, the cost-benefits, or watching the leakages of the borrowed funds? Remember my words, if things continue like the deals in a 'Qasino', on CPEC alone, much against its will, China will one day ask to let it run the whole country on contract basis- God forbid! This is said in view of the ways the roads and assets of the land are being pledged, or hypothicated to the lending agencies these days. And the ultimate burden of the mideeds of those 'drunken sailors', will fall on the innocent citizens in the shape of rising prices, joblessness, unbearable 'austerity' measures and more!
I m not as educated as Mr. Ishrat Husain but I do know whatever money you borrow, you have to return it with interest.
The money that Chinese are investing in Pakistan needs to generate superior return and economic activity then only "17% guaranteed return" can be generated. The problem is CPEC will cause flood of cheap Chinese imports which will cause decline of Pakistani industries and exports so loan repayment will squeeze Pakistan and loan repayment will be a big mess.
The writer failed to tell how income generated by CPEC direct and indirect will benefit Pakistan. Anyways this Article will make Indians happy, who are having sleepless nights ever since the CPEC was launched. This a infrastructure revolution. This CPEC is like a rain that will make the barren land green all over Pakistan without any discrimination.
I'm Pakistani but work Malaysia looking for job right
Looking for job
What about debt servicing of compnies... They ,also ,buy dollars for their debt servicing... and above all... What is rate of Electric they providing to Pakistan....?
Advising to do a to z is the easiest part. But doing it even from a to b is difficult.
CPEC will be beneficial for Pakistan. No doubt it will help in development of Pakistan. But it is planned as per chinese requirements. It could have more beneficial for Pakistan if it was planned as per pakistan's requirements. In india similiar projects like dmic ( delhi mumbai industrial corridor) is in progress which is well planned according to india's requirements, but the project is very much delayed already and its true progress you cannot monitor through media , as there are no articles /news about current ground reality of project.
@ZAKPukubanger , Observer,
The veil of secrecy about the terms and conditions of the CPEC appears to be lifting a bit which is good.
However, the suggestions made in the last paragraph "to make it happen" look like three consecutive five-year plans independent of and parallel to our regular five-year plans--a colossal undertaking.
What happens if we fail to make it happen and default on this extra 3.5 billion dollar a year payment?
How we be would penalized?
Interests on Loan + Security expenditure will be more than the total cost of the CPEC.
Thats all great to read but can someone PLEASE explain to me the following;
THE PROBLEM IS NOT IN ENERGY CAPACITY, IT IS IN CORRUPTION, INEFFICIENCY, NEPOTISM, AND A MINDSET BELONGING TO AN ILLITERATE FEUDAL NATION. NONE OF THAT CHANGES WITH CPEC......
14% export growth when the Chinese are using Pakistan route to produce and export their products is not feasible. China is not going to allow Pakistan to grow, especially in value-added sector. Pakistan's cotton, as an example will be used as a raw material and exported by the Chinese within and outside Pakistan.
Analysis is lop-sided and assumes everything to be rosy and work as per Ideal situation in an ideal country and environment.
17% return on Equity is extortion and not a business-like decision, which part of the world, a government agrees to a guaranteed return of 17% in Dollar Terms on Equity?
The author conveniently ignored a MAJOR factor on infrastructure developments. The Chinese have done shoddy jobs throughout the World, from India (eastern-seven sister states) to all countries in Africa and Asia. None of their roads have survived more than 3 years without huge craters and erosion of shoulders, cracks and potholes are common within first two years. Maintenance costs?
Continued.... Think of toll roads from Chinese borders to Gwadar. Toll tax shall generate enough to maintain the roads. Toll tax shall be way high on heavy trucks.
@D.K. PAMNANI , so true, a 17% return after tax means a much higher return and this return means, repayment of loan amount in every 4 years for decades to come.
The author is an ex-banker. He knows Internal Rate of Return(IRR), payback period and Present Value of Money.
He could have put these concepts in a simple format and given the TRUE side of the loans and investment.
I am ready to bet my last cent that CPEC is a conduit to make Pakistan an economic colony of the Dragon, a conduit to move Chinese goods, Chinese interests, dependency on Chinese supplies for maintenance and rehabilitation for power plants, roads and so on...
Beats me. I am completely flabbergasted. China offers to build an infrastructure (Road, some railway etc) CPEC for Pakistan which china needs badly but Pakistan will also be able to use to some degree. Estimated use by Chinese 80% Pakistan 20%. The land will be Provided by The Government of Pakistan free to the Chinese. Mostly Chinese Labor will be used for the project. The Chinese are guaranteed a 17% return on their investment.The Pakistanis are lauding the project, calling it a "Game Changer" and thanking the Chinese for their magnanimity, while the Chinese are laughing all the way to the bank. Also what if you gave a party and nobody came? You are still stuck with all the catering costs.What if China decided for whatever reason that using CPEC is not the most efficient way to transport goods for it, and cuts down its traffic drastically? Pakistan is still required to payback the cost of the project with a Guaranteed 17% rate of return. China holds all the trump card on this one.
Mr Ishrat Hussain fails to directly address the issue of the financial viability of this project. Are the assumptions on which the project is based solid enough? Is the projected revenue stream realistic within a certain confidence band? Does the projected discounted cash flow rate of return justify the project? In other words, is it a viable project ? Knowing all you know would the answer be a "Yes" or a "No"?
A very thorough and analytical review by the post.
@Pirabu 17% on Equty not the total Project cost.
"only one-fourth of the total project cost would be spent locally ..."
so this is what actually it is and why is government not telling the rate of interests and hidden costs that people of pakistan will have to pay for the rest of their lives. this corrupt PML(N) government will turn the CPEC project into another East India company...leaving its own people at the mercy of the foreign masters
17% return on Equity is extortion..
Is there any opposition party or any analyst with sanity to highlight this one sided deal for chinese?
If India had given such guarantees at 5%, the whole opposition party and media would have fought tooth to nail to stop it.
@Sajed syed how much would you like to bet? I will take that bet.
So what prevents the Chinese company to avail of the concessional financing available in China and then to invest that amount as the equity participation in the CPEC project? It will be a wonderful bargain for the Chinese company. Take the loan in China - may be at 4 to 5% rate. Bring that in Pakistan as equity in project and then reap 17% guaranteed return that too in dollar terms. So after bringing in such equity, if Yuan depreciates, more windfall gain. Is this an impossible scenario?
how does this amount of interest $910 m come ? Someone please elucidate it
You start by saying an analysis should be based on facts but the relevant facts are not really mentioned. $ 35 Billion is reserved for energy projects with a 17% rate of return in Dollar terms. With this calculation and keeping in mind interest payment on debt, what will be the cost of power/KWH ? You have omitted this very important fact which will determine whether any consumer can buy. If they cannot afford to buy this power causing revenue shortfall and losses, who will honor the liability ?
Only the Equity component of these projects is FDI. Equity is RISK capital therefore guaranteed rate of return means there is no risk, being so there is an obligation which in accounting terms can be classified as potential liability. When we come to investments in infrastructure we must project the revenue stream to ensure the projects are financially feasible. No such projection is given by this author. Without revenue projections no investment will pass the due diligence test.
@MohAJIR If cheaper products come from China it will only help the poor people and make their life better and slowly at par with the rich as they will be able to enjoy all the amenities as their counter parts
After reading all the comments by various people.I realize that some of them do make lot of sense and are quite logical.It would be beneficial if the Writer Mr.Ishrat Husain could comment on the 17% return issue in depth in short form which seems to be of main concern to the majority of the people including myself.
@Pirabu Due to the current energy condition, the Govt has been offering higher returns to attract investment specifically in this sector. This return is part of power policy and is not some special favour to Chinese.
Billion dollar interest payment an year is not a big deal considering overall benefits likely to accrue . Reliance Industries , a single company has invested 22 Bn dollar in telecom business and pays $1 Bn annual bank interest
One question:
Once CPEC road develop, what if China don't use that road much and it failed to generate required revenue to pay back the loan?
@Indian ; then we will contact you for your wise suggestions!
Nobody (including the author) knows squat about CPEC. You would think that one would at least know the structure of the power plant deals and the impact on rates ... those should be straightforward. But NOPE. Classic sign of corruption and likely sign that the power plants are going to be funded through rate increases which may change public opinion about the Chinese/Pakistan relationship.
Our budget allocation for infrastructure is $500 Billion. We are raising our own finances, through various methods, why cannot pakistan build its own Economic corridor, instead of depending on China
@Lohpurush reliance has huge export revenue from it's jamnagar plant. they can afford it. will pakistani projects be able to export that much?
CPEC will make such needs immaterial entirely.
Nobody is talking about power plant ?? Which consists of major portion of investment. What mode of power plant China is going to build ?? Coal or Gas or Oil power plant ?? If it is coal based power plant then some expert should evaluate for environmental implications also ??
It is too good to be true.
Good for Pakistan if it works out good. But Pakistan should ensure that the manufacturing industries survive and thrive the Chinese import, Pakistani's are hired to work on projects which would inturn build the skill set necessary to sustain the projects. More importantly ensure that the economic growth helps Pakistani's get out of any possible debt trap.
Very detailed Financial analysis of CPEC. Kindly update about the government taxation policy on CPEC trade. Would CPEC be a free trade agreement like TTP or European trade zone or Pakistan is going to charge tax on imports and exports through Gawadar port. This is still black whole and I have not find any policy statement on taxation by Pakistan govt.
good information. best of luck? but qesstions to be asked is 17% return on investment will be repatraited! if so what will be the assumed price of power per unit? is it workable for the earning capacity of common man? secondly what kind of employment opportunities for local poplaation, skilled, unskilled, professionals, managers? is there any agreement on this.
On the one hand the author says"Foreign investors’ financing comes under foreign direct investment; they are guaranteed a 17pc rate of return in dollar terms on their equity" On the other hand he says that balance of payments will not create liability. Excuse me? What is the 17% return on equity that the government has promised? Is that not a liability?
In any case, where in the world does equity get government guaranteed returns? Calling a loan 'equity' does not make it so.
@SAM Writer has explained 17pc return on equity. But, this return is given after paying the interest on the loan taken by the Chinese companies from the Chinese Banks What is the rate of interest these companies r going to pay. Please clarify. If guaranteed such a high returns of 17pc r promised in today's competitive world, I wonder what costs we will have to pay for the Chinesecond power.
@Vijay B. , and Trump Card is like Trump of America.
@Lohpurush Also you are forgetting RIL had a cash reserve of $ 25 billion with $4 billion annual profit from petrochemical refining business.
@Basit Ali It will also kill small-medium size enterprises in Pakistan which employs thousands in Pakistani. If employment is lost, from where they will get money to buy cheap Chinese product .
Good analysis
@truth , Being "Truth" and being ill-informed is two different things. First of all Srilankan case is very different from Pakistan. Pakistan itself is a much bigger economy and country. The location is more vital and strategic for China and the other Asian Republics. China did not commit these kinds of investments in Srilanka. The Sri Lankan port is for more of the defensive purposes. Just be close to South of India. So if China has 99 Years Lease then India should be worried not Sri Lankans.
Reasonable analysis but there are are few overlooks in the analysis for example power projects mostly have a debt to equity ratio of 75:25 and the debt taken by the power companies is indirectly guaranteed by the GOP against a sovereign guarantee as is the case in the Sindh Engro project or for that matter the flow risk lies with the Govt in wind and hydro power projects. Anyhow, it is good to see this debate happening from the start of the CPEC - this might force the Govt to act sanely in some cases.
What I see is with so many energy projects Pakistan will have surplus power which will help the industries sector to grow but power tariff should be moderate for industries to be profitable.
Thanks for the analysis. You calculated $2.4Bn per year for the return on equity to be repatriated. Wouldn't the IPP's be repatriating debt portion of the investment as well? If true then the IPP related outflow from Pakistan could be more than $2,4Bn.
@Sajed syed , you have painted a very broad picture without any data to slightly justify them. By the way in the power sector 17% return on equity has been a standard rate for at least Ten years and it was Set up during the Musharraf dictatorship.
@Vijay B. ,First of all you had mentioned 17% a few times. This percentage is is only for power projects and it ROI on equity not for the entire investment. I can understand being an Indian you will only assume and hope for the worst scenarios. Let us deal with China and if the deal us so bad why India is so concern about it? And for your information this is a big lie when you said all the Labour's are from China. They are bringing in experts in various fields and Labour cost is higher in China. I can quote many projects where Labour ratios are 30/70 ,in favor of Pakistan. So just eat your heart out.
@Shyam : Would be possible only for the local component of CPEC not for the foreign component.
it is much more useful for China as Pakistan has outlets via Sea Route. Burden on Pakistan
Very good analysis.
Repay debit @ 17% interest; author forgot to mention that the capital has also to be repaid What will be the EMI? current decline in exports to be reversed and increased by 17% annually. All is possible
Very well written article. However, the costs of the projects may further rise upon completion.
This investment will provide much-needed power supply to Pakistan. The question is - Given high rate of returns, how much will it ultimately cost the consumer, and if this power is used for industry, will it be cost effective and competitive.
No matter, CPEC will provide a lifeline to the Chinese market, and their goods will always be accessible to Pakistan at much lower prices. So, perhaps the power generation will be for the household, and it may have to be subsidized by the government!
Is their a possibility for individual Pakistanies to participate in CPEC as public investors, Shoud'nt Pakistani public be alloted a percentage participation as investors?
Do our leadership team have access to terms and conditions of the CPEC? and do they have an idea of net ougoing and incomings?
This is an excellent deal. IMF need to learn.
With tax prayers
Fresh of the press, great news for all CPEC aficionados. Learning from your example, the mighty United States of America has now decided to build a bridge from its west coast to Hawaii. No more ships needed, everything will be trucked in from the mainland. This project will be a "Game Changer." It is expected that the tolls from the trucks will pay for the project in its entirety. Who says we third world countries cannot teach these so called advanced countries a thing or two? Incidentally the whole project has been contracted out to China with a guaranteed 17% ROI till it is paid of completely in the next 1000 years. In case of any default China gets to keep all the Islands of Hawaii.
excellent analysis - of how the govt of nawaz anyway proposed , with some inputs from Military, the CPEC project repayment.
Lovely paper analysis, shows confidence of repayment as its basically a staggered loan and not a USD 50 Bn lumpsum now . Pakistan should go for ensuring this is done, asap. Especially the merchant power projects.
Are u sure that there will be a 17% return. I doubt it. Even in developed countries, the return is less than 10%.
Chinese companies will use our infrastructure specially new motorways and road network. They will pay transit fees for allowing them shipment from China to Gawadar. If we take into account transit fees that will be paid in foreign currency preferably in US Dollars, then it is likely that there will not be any pressure on our current account.