Pakistan has once again turned to China for help in avoiding a foreign currency crisis by borrowing $1 billion from Chinese banks in April on "good, competitive rates”, the Financial Times (FT) reported on Wednesday.
In an interview with the publication, State Bank of Pakistan (SBP) Governor Tariq Bajwa confirmed the loans were made by Beijing-backed banks on good rates.
"The money strengthens the financial, political and military ties between the two countries," read the FT article.
“Chinese commercial banks are awash with liquidity,” Bajwa was quoted as saying.
Pakistan's foreign exchange reserves have dropped from $18.1bn in April last year to $10.8bn in May this year.
According to the article, Pakistani officials also hope that borrowing from Chinese banks will also save Pakistan a trip to the Internation Monetary Fund (IMF).
Since December 1988, Pakistan has had nine separate engagements with the IMF — three of them were double programmes. That means there have been 12 IMF programmes in Pakistan in the last 28 years. Only four of them – all initiated in the 2000s and 2010s – were completed successfully; all the rest were abandoned halfway in the 1990s.
Read: Cure or curse: Our perpetual dependence on the IMF
Lending money to Pakistan also favours China, said FT quoting Pakistani officials, as it does not wish to disclose details of the loans that are part of the CPEC project. China is investing almost $60bn on building infrastructure in Pakistan, however, it is reluctant to reveal the sum it is lending to Islamabad as part of the CPEC project.
“The Chinese are not keen on western institutions learning the minute details of [financing of] CPEC projects," an unnamed official in Islamabad was quoted as saying. "An IMF programme will require Pakistan to disclose the financial terms to its officials.”
According to the FT report, prior to last month's loan of $1bn, Pakistan had borrowed almost $1.2bn from Chinese banks since April, 2017 and more loans might follow. Another anonymous official quoted by the publication claimed that Pakistan's finance ministry has held "informal discussions" with the Chinese to lend at least an additional $500mn before the end of the financial year April, 2019.
“Borrowing from China has become an increasing feature of our external side,” the official said.
The article also touches upon the skepticism around the Chinese loans. Mushtaq Khan, a former SBP economist, while speaking to FT said: “Pakistan’s policymakers are not doing enough to narrow the external deficit — instead, they’re just financing the gap."
"China factors importantly into this financing, but that doesn’t really solve our problem — it only postpones and exacerbates the issue,” he added.
Pakistan secured a $1 billion commercial loan from a Chinese bank a day after the announcement of the federal budget 2018-19 on April 27 which is repayable in three years, Dawn reported earlier this month. This improved the country's total foreign exchange reserves to $17.7bn, jacking up official reserves held by the State Bank of Pakistan by 5.5 per cent to $11.5bn.
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Comments (90) Closed
More debt for the coming generations to pay back
Take more and more..we all r not going to repay it.
More loans will make you to pay more interest. How you will serve your interest for world bodies like IMF ? Think like economist, not like a politician.
Stupendous countries affairs. Well done.
"The money strengthens the financial, political and military ties between the two countries," love the explaination made by ruling dispensation in Pakistan,i must say they are miles ahead of us.
Looking at our cost of manufacturing, two factors make us noncompetitive - Interest Rates & Energy Tariffs. What we import for re-export is also getting costly due to exchange rate. Land has only gone sky high.
Only factor of production left with us is Labor. Slightly, cheaper but lets squeez it thoroughly, they should rather go abroad and save us from all this production mess and send us remittances- easy way out.
Safely assume that the 1st Billion $ which will we earn as exports due to CPEC shall be written on books after 10 years.
China has supported Pakistan in thick and thin but at the same time Chinese are known to be hard task masters when it comes to recovery of money and interest, which is quite evident with their stance in SriLanka and some African countries.
Good News.
Reserves have fallen from 11 billion to 10 billion dollars in a year! Astonishing. Pakistan is heading knee deep in trouble.
More debt? Good luck.
70 years and still looking at other countries for help! And loans strengthen economic ties?! Trade does not loans! Unbelievable!
What is favorable rate? Chinese are shroud businessmen and will do nothing for free. It is sad economic situation in Pakistan right now and they have become expert in borrowing instead improving our export and monitoring money changers by imposing transection restrictions
Doesn't look like sustainable! The entire world would know every details of the CPEC. If it is in a piece of paper, sure that any one can get hold of it. Citing this as the reason does not add up.
A debt is debt, what ever be the source and rate of interest. The question is who and how it is going to be repaid? A poor commentary on the governance.
"Pakistan's foreign exchange reserves have dropped from $18.1bn in April last year to $10.8bn in May this year"- $8bn loss in one year? sure heading to what our adversaries call,'a failed state'.
Nawaz and Co think they can erase the loans like they do theirs with domestic banks. How did the reserves went to 11B from 18B in one year? Where did the money go? More flats?
How can borrowing boost our reserves? If so, why not borrow $100 billion and say we have huge foreign reserves? Are we only interested in making claims? On borrowed money we have to pay interest (China charges way above market rates). The interest has to be paid from our 'real' reserves thus depleting them further. The only way forward is expanding our exports. This can be easily done if we swallow our pride and allow rupee to find its own realistic level (I say around 125-130 to a dollar). This not only boosts our exports but also reduce our imports thus cutting the trade deficit.
how do you define "good, competitive rates”? 15%? 18%? 20%?
China should release cpec funds asap
Pakistan pays double the Interest of even companies in India Like Reliance.
Interest rate not disclosed says it all. Chinese banks are awash with dollars correct. They are not concerned about repayment till interest keeps coming.
In the last 70 years Pakistan gave up everything in the pursuit of chasing the enemy.Forgot development,people and betterment of society.Made friends along and opened its doors thinking it will give Pakistan a upper hand in dealing with its enemy.It hasn't learned from it's past.Don't blame the present government, this has been a norm in Pakistan starting 1960's.Enemies GDP and foreign reserves are going up where as Pakistan's going down.It's time to give up the pursuit and stablise Pakistan's economy on its own even if it's required to eat only 1 time.There is no friend in this world Self help is the best help.
@Zia "Where did the money go? More flats?" There are more urgent matters than flats. Protocol, police protection, London hospital bills, election campaigns, tax amnesties etc.
'Good competitive rates'?
I bet they are double digit. Risk and reward go hand in hand..
No need to worry. Once CPEC is completed and runs in full swing these loans can be returned easily. Pakistan will be surplus with foreign currency and foreign reserve. Have patience.
It's hallmark of PML(N) government to obtain loans, and burden more on nation. Now as CPEC is operational,the revenues started pouring in, Pak may repay the loan at faster pace. The exports already accelerated after devaluation, things are moving in right directions.The recovery of corruption money will be an added advantage, depends how quick the courts issue orders.
This Government is making the nation fully debt laden and consequently will have to sell out to China. Why can't they read the writings on the wall?
Ehsan Iqbal prediction year 2025 Pakistan will become 8th economic power in the world, how he can better explain.
Time bomb waiting to explode. Watch out!!!!
Compromising long term for short term complacency.
No lunch is ever free from a Bank anywhere in the world.
Enemity towards India and falling behind Kashmir which no belonged to Pakistan has costed them somuch. They still haven't learned anything. India has not ininitiated any war still Pak things India is enemy. India will never go to war... No matter how currupt our politicians are glad they didn't drag us to hate things. They concentrated on development
1bn or 500mill is not going to cut it. Pakistan needs tens of billions in loans to finance its current account deficit.
Ishaq Dar once said once his government will be in power he will break the begging bowl now it seems they have constructed a stainless steel begging bowl to lend$$$$$in billions every second month from China???
Pakistan is democratic country..hence people should know terms and conditions of all the loans from China !
Loans on secret terms are certainly not good loans.
The more China realizes Pakistan has nowhere else to go, the more it will squeeze it.
That $1 billion was received on 28th April and was all used up to finance the current account deficit of just 2 weeks. By 1th May it was all finished.
How long we can rely on others for bail-out? Look towards your own manpower to create financial resources. Train your people, they are the real asset of the country.
We should look at India and befriend with him. Most of our ills will vanish. The route we are choosing I will weaken us.
Politics in Pakistan has taken country to deep down in debts with no concrete plans to repay.. Hope they change their priorities..
The pakistani govt thinks it is too clever by not disclosing fund borrowed to IMF etc. - but these lenders are not stupid. A debtor's ability to pay back loans factors in all such loans.
What percentage of the GDP is spent on debt servicing? The politicians are borrowing from future generations.
Not very promising - the real test of the debt burden of CPEC has not yet started. The economy and industry are likely to suffer from the cheaper supplies from China. Stay tuned.
Name one country that has prospered after dealing with China?
Shame on you NS and cabinet. You have severely damaged Pakistan economically and financially. NS and his cabinet personal bank accounts and properties should be taken up by the state bank of Pakistan.
Shame why not confiscate corrupt politicians assets to get that money
No need loan. just bring NS, AAZ and MQM money back from Swiss banks and Pakistan wont ever ask for a loan. ...simple
Asking China for bail out means more trouble in future. China is already taking the highest interest on the money they have lent us. In a situation where Pakistan could not repay, China will take over our areas on lease, just like it captured Srilankan ports for next 99 years. This is once again a slavery like we had of British.
No realistic comments can be made until you see the terms of the loan from China except two universal points when any individual/entity/country borrows money. Firstly, there is no free lunch in this world and secondly, every debt has to be paid back in the end and longer you delay in paying; higher the cost.
Are you guys so naive and can't see what happens when a country can't pay back Chinese loans? Get ready for another round of foreign occupation
Pakistan people should ask national auditor to reveal the last expenditure to the country and also how much revenue got from collecting tax and borrowing money. For this , I think civilian should handle Foreign affairs.
@Fareed N latest iphones,latest gamings,cosmetics do what other poor nations do tax luxury items up to many time until people stop buying them and bring down inport bill.In simple words to reduce car imports exempt cheap car tax free and rest are luxury.The way import bill is going you have to literally tax these thibgs to maximum and putting more taxes on foreign multinationals so they cant send money back rather reinvest.we need $50 billion a year loans in future if import bill has same structure.
Pakistan should look at those who have looted this country for decades for a bailout by recovering that money.
Our Pakistan friends should not depend much on china it's like borrowing money from your friend and if. We don't return back we know what happens either they will show their colours or come and sit in our house ..same thing will happen with Pakistan too it's ..times up they should start developing friendly relationship with India and encourage imports and exports and explore so many opportunities available between them and build their nation and pull them out from this grave situation before you spoil ur friendliness with China. I am not selfish about ur relations with China but I am worried to see my neighbour go thru this difficult period...
Chinese has mastered in shrewdness. More debts from China. Sooner latter Pakistan will be semi colony of China, just like Sri Lanka.
More, loan, debt, since our ex-Finance Minister, runaway put local citizen direct taxes on telephone cards 35/40% taxes on mobile card, will this State Bank of Pakistan (SBP) Governor Tariq Bajwa , will this Gov have banking experience, he have non in banking and finance, some qualified person in SBP should see interest rate, world market, capital market, US treasury future forecast, I as banker doubt credit of Gov negotiability and qualification, we are past bad experience of PEMRA , PTA etc.
The state bank of Pakistan needs to explain the justification for these loans.
@Chit Mantra how , please do explain
Pakistan has no plan to replay the loan. It comes free. The only payment will be in term of land for Chinese naval and airforce bases.
Why not cut some services and stop buying expensive cars and luxury trips. Live what you have for a few years and get out of the debt. It will improve the country 10 times in less than three years.
@Wondering The asymmetry is bound to increase in the coming years. Loans will not help. There is a saying in Sanskrit which if loosely translated reads "Make loans and live happily!". This statement is applied to persons who make loans without caring about the consequences.
Chinese banks are flush with cash. Extract it to the extent possible!
Money borrowed a extremely competitive rates.You don’t have to return it.
An easy way to get a loan from China without knowing how to pay it back!
@Mahi sadly its much more. Pakistan will also be cultivating produces for the exclusive use of Chinese in state owned farms. Same with factories - basically Pakistan will be the first Exclusive Economic Country of China which makes tax free produces for Chinese consumption. If in doubt please look at what china did in Africa - it is the blueprint to how things will be in the future.
@Aimal If that happens, Chinese will govern better, things made in Pakistan will have different label and can be exported with many Chinese companies moving into Pakistan. Above all, you don’t have to repay the loans and your arch enemy, you can claim, is surrounded by yourselves. Is that bad deal?
Sooner or later, you shall have to go to IMF or World Bank. Once you are there, all details i.e. rate, maturity and conditionalities of the loans taken from China - commercially or under CPEC - have to be shared with them. It would be quite difficult to doctoring the documentation afresh. Once such detail is with IMF/World Bank and is made public, there is sheer possibility of even the staunch supports of CPEC, criticizing this project. It is this fear of the Govt of Pakistan and China which is somehow delaying going to IMF.
Its about time Pakistan stood on its own two feet rather being a begger on the World stage shame on the people running the country for bringing the Nation this low. On the other hand this blame game the politicians are playing with each other must stop so they can divert there energy for the good of the Land, its high time.
Whenever in trouble, either run to UN or to China.
The more Pakistan borrows from China, the more near it gets to the like of Sri Lanka situation. Sri Lanka had to transfer a big port on 99 year lease to China for being unable to pay back the borrowed money
@Asif khan yeah but will be made to repay differently and badly.
People who have no stake in Pakistan with their families being settled oversea are taking up loans, money they them selves will never pay back not will their children be affected by it. Also, billions of billions of loans and AID and we are still a very very poor country. It do not take much brain power to understand that much of these loan money never went down to the people. I am amazed people will still give these people their votes. "Votes in the hand of the "unvotables")
@Vijay B.. Rubbish. China can’t make an enemy of Pakistan. Also, it is Chinese economy that will be equally in trouble, if not more, if it bases itself so much on loans to other nations that might find it difficult to pay back. That is very similar to banks that give loans to people who can’t pay back
What can China do? Take away CPEC infrastructure brick by brick back? They just have to write off these loans. That is why they are trying to get India and Iran to join it so they will take on the debt burden. That is why NS was trying friendship with these countries too, trying to save Pakistan from having to pay all the Chinese debt.
Most of the countries in the world are borrowing including the mighty USA who has borrowed from the Chinese. This means China is giving to all because they are hard working and know their economy.
Taking a loan to repay an existing loan..its like withdrawing cash from your credit card to pay minimum due on the same credit card.....would help if people of Pakistan are told what is the so called "good, competitive rate”
This is dangerous! Pakistan should remember what happened with Sri Lanka. When it was unable to repay the load for the port, China converted that loan into equity. This is how China is conquering the lands on foreign soil.
- Turning to China is better than rest of the international financial institution.
- Don't use China for quick fix, plan a long term strategy to get rid of borrowing over the next few decades.
- Every other govt. in Pakistan should stop bragging about " We have broken the Kashkol" that is a lie and in't happening in coming decades 4 Make sincere efforts towards recovering stolen/ corrupted wealth from politicians and stop providing covers like the recent lousy tax schemes.
- Plan to reduce the debt even a smaller portion at a time. Even if it takes 50 years
This is just the beginning. China played a game with you all and you fell for it. You will have to get more loans from them to pay off exorbitant interest to pay off the interest from this loan (and CPEC), or give up a portion of you land to them. Believe it or not, this is good for India. China and India may be rivals but both mindsets are focused on the growth for which you need stability.
Naive Pakistan masses are led to believe in free lunch. The day is not far when the elite will abandon this sinking ship and leave the masses on board to drown. Meanwhile, the Elite can keep playing the fiddle while the Nation burns.
Congratulations for obtaining the loans. China, unlike the US, is not willing to writeoff the loans. Pakistan's history has been pumped with a lot of pride it's time for some realities to be exposed.
Ours is the only country in the world proudly tell others that we increased the reserves by borrowed fund....What a nonsense ! Is it a matter of pride?
Soon China will own Pakistan. Humbarta Port and several ventures in Africa are now owned by China because loans could not be repaid. Pakistanis like their Muslim brothers in Xinjiang province will be forced to adopt prevailing culture in China. On the other hand Pakistanis may be economically better off.
Why China? Why not our corrupt leaders and all politicians during the past 40 years at least. Bring looted pakistan wealth from overseas and Pakistan will be fine.
I like the ministers analogy, the more you borrow the stronger the relationship grows.
Make peace with your neighbors, cut down on your biggest expense, which is investing in Defense. Work on open borders. Pakistanis then have a billion people market to do business with. Countries from around the world fighting to enter this market. You guys are bordering this market. Simple economics. Earn more - Spend less
@Thiru "What can China do? Take away CPEC infrastructure brick by brick back? They just have to write off these loans."
No. They will ask Pakistan to give rights over Gwadar port and use it as a naval base. No different from what they did with Sri Lanka. They may also demand prime agricultural land to be turned over to China.
It is not cash loan but commodity loan. Which means Pakistani importer will be able to buy things with a deferred payment with interest for 3 year. The cash will be go to the Chinese exporter directly from Chinese bank with guarantee from pakistan. The wise can make out of it actually who gained double from this loan. Pakistan will be able reduce import bill saving dollars but Chinese will get interest, pro fit of businesd and job in their mainland.
This is part of "debt trap diplomacy" which rich nations plays with a weaker one !
Why do we always have to look around for bail outs. When will we be self sufficient?
Financially strong Pakistan is in the interest of India also. China wants Pakistan to take more and more loans and later default on the payments. This will lead up to Chinese acquiring assets to cover up their loans.
Comments (90) Closed
More debt for the coming generations to pay back
Take more and more..we all r not going to repay it.
More loans will make you to pay more interest. How you will serve your interest for world bodies like IMF ? Think like economist, not like a politician.
Stupendous countries affairs. Well done.
"The money strengthens the financial, political and military ties between the two countries," love the explaination made by ruling dispensation in Pakistan,i must say they are miles ahead of us.
Looking at our cost of manufacturing, two factors make us noncompetitive - Interest Rates & Energy Tariffs. What we import for re-export is also getting costly due to exchange rate. Land has only gone sky high.
Only factor of production left with us is Labor. Slightly, cheaper but lets squeez it thoroughly, they should rather go abroad and save us from all this production mess and send us remittances- easy way out.
Safely assume that the 1st Billion $ which will we earn as exports due to CPEC shall be written on books after 10 years.
China has supported Pakistan in thick and thin but at the same time Chinese are known to be hard task masters when it comes to recovery of money and interest, which is quite evident with their stance in SriLanka and some African countries.
Good News.
Reserves have fallen from 11 billion to 10 billion dollars in a year! Astonishing. Pakistan is heading knee deep in trouble.
More debt? Good luck.
70 years and still looking at other countries for help! And loans strengthen economic ties?! Trade does not loans! Unbelievable!
What is favorable rate? Chinese are shroud businessmen and will do nothing for free. It is sad economic situation in Pakistan right now and they have become expert in borrowing instead improving our export and monitoring money changers by imposing transection restrictions
Doesn't look like sustainable! The entire world would know every details of the CPEC. If it is in a piece of paper, sure that any one can get hold of it. Citing this as the reason does not add up.
A debt is debt, what ever be the source and rate of interest. The question is who and how it is going to be repaid? A poor commentary on the governance.
"Pakistan's foreign exchange reserves have dropped from $18.1bn in April last year to $10.8bn in May this year"- $8bn loss in one year? sure heading to what our adversaries call,'a failed state'.
Nawaz and Co think they can erase the loans like they do theirs with domestic banks. How did the reserves went to 11B from 18B in one year? Where did the money go? More flats?
How can borrowing boost our reserves? If so, why not borrow $100 billion and say we have huge foreign reserves? Are we only interested in making claims? On borrowed money we have to pay interest (China charges way above market rates). The interest has to be paid from our 'real' reserves thus depleting them further. The only way forward is expanding our exports. This can be easily done if we swallow our pride and allow rupee to find its own realistic level (I say around 125-130 to a dollar). This not only boosts our exports but also reduce our imports thus cutting the trade deficit.
how do you define "good, competitive rates”? 15%? 18%? 20%?
China should release cpec funds asap
Pakistan pays double the Interest of even companies in India Like Reliance.
Interest rate not disclosed says it all. Chinese banks are awash with dollars correct. They are not concerned about repayment till interest keeps coming.
In the last 70 years Pakistan gave up everything in the pursuit of chasing the enemy.Forgot development,people and betterment of society.Made friends along and opened its doors thinking it will give Pakistan a upper hand in dealing with its enemy.It hasn't learned from it's past.Don't blame the present government, this has been a norm in Pakistan starting 1960's.Enemies GDP and foreign reserves are going up where as Pakistan's going down.It's time to give up the pursuit and stablise Pakistan's economy on its own even if it's required to eat only 1 time.There is no friend in this world Self help is the best help.
@Zia "Where did the money go? More flats?" There are more urgent matters than flats. Protocol, police protection, London hospital bills, election campaigns, tax amnesties etc.
'Good competitive rates'?
I bet they are double digit. Risk and reward go hand in hand..
No need to worry. Once CPEC is completed and runs in full swing these loans can be returned easily. Pakistan will be surplus with foreign currency and foreign reserve. Have patience.
It's hallmark of PML(N) government to obtain loans, and burden more on nation. Now as CPEC is operational,the revenues started pouring in, Pak may repay the loan at faster pace. The exports already accelerated after devaluation, things are moving in right directions.The recovery of corruption money will be an added advantage, depends how quick the courts issue orders.
This Government is making the nation fully debt laden and consequently will have to sell out to China. Why can't they read the writings on the wall?
Ehsan Iqbal prediction year 2025 Pakistan will become 8th economic power in the world, how he can better explain.
Time bomb waiting to explode. Watch out!!!!
Compromising long term for short term complacency.
No lunch is ever free from a Bank anywhere in the world.
Enemity towards India and falling behind Kashmir which no belonged to Pakistan has costed them somuch. They still haven't learned anything. India has not ininitiated any war still Pak things India is enemy. India will never go to war... No matter how currupt our politicians are glad they didn't drag us to hate things. They concentrated on development
1bn or 500mill is not going to cut it. Pakistan needs tens of billions in loans to finance its current account deficit.
Ishaq Dar once said once his government will be in power he will break the begging bowl now it seems they have constructed a stainless steel begging bowl to lend$$$$$in billions every second month from China???
Pakistan is democratic country..hence people should know terms and conditions of all the loans from China !
Loans on secret terms are certainly not good loans.
The more China realizes Pakistan has nowhere else to go, the more it will squeeze it.
That $1 billion was received on 28th April and was all used up to finance the current account deficit of just 2 weeks. By 1th May it was all finished.
How long we can rely on others for bail-out? Look towards your own manpower to create financial resources. Train your people, they are the real asset of the country.
We should look at India and befriend with him. Most of our ills will vanish. The route we are choosing I will weaken us.
Politics in Pakistan has taken country to deep down in debts with no concrete plans to repay.. Hope they change their priorities..
The pakistani govt thinks it is too clever by not disclosing fund borrowed to IMF etc. - but these lenders are not stupid. A debtor's ability to pay back loans factors in all such loans.
What percentage of the GDP is spent on debt servicing? The politicians are borrowing from future generations.
Not very promising - the real test of the debt burden of CPEC has not yet started. The economy and industry are likely to suffer from the cheaper supplies from China. Stay tuned.
Name one country that has prospered after dealing with China?
Shame on you NS and cabinet. You have severely damaged Pakistan economically and financially. NS and his cabinet personal bank accounts and properties should be taken up by the state bank of Pakistan.
Shame why not confiscate corrupt politicians assets to get that money
No need loan. just bring NS, AAZ and MQM money back from Swiss banks and Pakistan wont ever ask for a loan. ...simple
Asking China for bail out means more trouble in future. China is already taking the highest interest on the money they have lent us. In a situation where Pakistan could not repay, China will take over our areas on lease, just like it captured Srilankan ports for next 99 years. This is once again a slavery like we had of British.
No realistic comments can be made until you see the terms of the loan from China except two universal points when any individual/entity/country borrows money. Firstly, there is no free lunch in this world and secondly, every debt has to be paid back in the end and longer you delay in paying; higher the cost.
Are you guys so naive and can't see what happens when a country can't pay back Chinese loans? Get ready for another round of foreign occupation
Pakistan people should ask national auditor to reveal the last expenditure to the country and also how much revenue got from collecting tax and borrowing money. For this , I think civilian should handle Foreign affairs.
@Fareed N latest iphones,latest gamings,cosmetics do what other poor nations do tax luxury items up to many time until people stop buying them and bring down inport bill.In simple words to reduce car imports exempt cheap car tax free and rest are luxury.The way import bill is going you have to literally tax these thibgs to maximum and putting more taxes on foreign multinationals so they cant send money back rather reinvest.we need $50 billion a year loans in future if import bill has same structure.
Pakistan should look at those who have looted this country for decades for a bailout by recovering that money.
Our Pakistan friends should not depend much on china it's like borrowing money from your friend and if. We don't return back we know what happens either they will show their colours or come and sit in our house ..same thing will happen with Pakistan too it's ..times up they should start developing friendly relationship with India and encourage imports and exports and explore so many opportunities available between them and build their nation and pull them out from this grave situation before you spoil ur friendliness with China. I am not selfish about ur relations with China but I am worried to see my neighbour go thru this difficult period...
Chinese has mastered in shrewdness. More debts from China. Sooner latter Pakistan will be semi colony of China, just like Sri Lanka.
More, loan, debt, since our ex-Finance Minister, runaway put local citizen direct taxes on telephone cards 35/40% taxes on mobile card, will this State Bank of Pakistan (SBP) Governor Tariq Bajwa , will this Gov have banking experience, he have non in banking and finance, some qualified person in SBP should see interest rate, world market, capital market, US treasury future forecast, I as banker doubt credit of Gov negotiability and qualification, we are past bad experience of PEMRA , PTA etc.
The state bank of Pakistan needs to explain the justification for these loans.
@Chit Mantra how , please do explain
Pakistan has no plan to replay the loan. It comes free. The only payment will be in term of land for Chinese naval and airforce bases.
Why not cut some services and stop buying expensive cars and luxury trips. Live what you have for a few years and get out of the debt. It will improve the country 10 times in less than three years.
@Wondering The asymmetry is bound to increase in the coming years. Loans will not help. There is a saying in Sanskrit which if loosely translated reads "Make loans and live happily!". This statement is applied to persons who make loans without caring about the consequences.
Chinese banks are flush with cash. Extract it to the extent possible!
Money borrowed a extremely competitive rates.You don’t have to return it.
An easy way to get a loan from China without knowing how to pay it back!
@Mahi sadly its much more. Pakistan will also be cultivating produces for the exclusive use of Chinese in state owned farms. Same with factories - basically Pakistan will be the first Exclusive Economic Country of China which makes tax free produces for Chinese consumption. If in doubt please look at what china did in Africa - it is the blueprint to how things will be in the future.
@Aimal If that happens, Chinese will govern better, things made in Pakistan will have different label and can be exported with many Chinese companies moving into Pakistan. Above all, you don’t have to repay the loans and your arch enemy, you can claim, is surrounded by yourselves. Is that bad deal?
Sooner or later, you shall have to go to IMF or World Bank. Once you are there, all details i.e. rate, maturity and conditionalities of the loans taken from China - commercially or under CPEC - have to be shared with them. It would be quite difficult to doctoring the documentation afresh. Once such detail is with IMF/World Bank and is made public, there is sheer possibility of even the staunch supports of CPEC, criticizing this project. It is this fear of the Govt of Pakistan and China which is somehow delaying going to IMF.
Its about time Pakistan stood on its own two feet rather being a begger on the World stage shame on the people running the country for bringing the Nation this low. On the other hand this blame game the politicians are playing with each other must stop so they can divert there energy for the good of the Land, its high time.
Whenever in trouble, either run to UN or to China.
The more Pakistan borrows from China, the more near it gets to the like of Sri Lanka situation. Sri Lanka had to transfer a big port on 99 year lease to China for being unable to pay back the borrowed money
@Asif khan yeah but will be made to repay differently and badly.
People who have no stake in Pakistan with their families being settled oversea are taking up loans, money they them selves will never pay back not will their children be affected by it. Also, billions of billions of loans and AID and we are still a very very poor country. It do not take much brain power to understand that much of these loan money never went down to the people. I am amazed people will still give these people their votes. "Votes in the hand of the "unvotables")
@Vijay B.. Rubbish. China can’t make an enemy of Pakistan. Also, it is Chinese economy that will be equally in trouble, if not more, if it bases itself so much on loans to other nations that might find it difficult to pay back. That is very similar to banks that give loans to people who can’t pay back
What can China do? Take away CPEC infrastructure brick by brick back? They just have to write off these loans. That is why they are trying to get India and Iran to join it so they will take on the debt burden. That is why NS was trying friendship with these countries too, trying to save Pakistan from having to pay all the Chinese debt.
Most of the countries in the world are borrowing including the mighty USA who has borrowed from the Chinese. This means China is giving to all because they are hard working and know their economy.
Taking a loan to repay an existing loan..its like withdrawing cash from your credit card to pay minimum due on the same credit card.....would help if people of Pakistan are told what is the so called "good, competitive rate”
This is dangerous! Pakistan should remember what happened with Sri Lanka. When it was unable to repay the load for the port, China converted that loan into equity. This is how China is conquering the lands on foreign soil.
This is just the beginning. China played a game with you all and you fell for it. You will have to get more loans from them to pay off exorbitant interest to pay off the interest from this loan (and CPEC), or give up a portion of you land to them. Believe it or not, this is good for India. China and India may be rivals but both mindsets are focused on the growth for which you need stability.
Naive Pakistan masses are led to believe in free lunch. The day is not far when the elite will abandon this sinking ship and leave the masses on board to drown. Meanwhile, the Elite can keep playing the fiddle while the Nation burns.
Congratulations for obtaining the loans. China, unlike the US, is not willing to writeoff the loans. Pakistan's history has been pumped with a lot of pride it's time for some realities to be exposed.
Ours is the only country in the world proudly tell others that we increased the reserves by borrowed fund....What a nonsense ! Is it a matter of pride?
Soon China will own Pakistan. Humbarta Port and several ventures in Africa are now owned by China because loans could not be repaid. Pakistanis like their Muslim brothers in Xinjiang province will be forced to adopt prevailing culture in China. On the other hand Pakistanis may be economically better off.
Why China? Why not our corrupt leaders and all politicians during the past 40 years at least. Bring looted pakistan wealth from overseas and Pakistan will be fine.
I like the ministers analogy, the more you borrow the stronger the relationship grows.
Make peace with your neighbors, cut down on your biggest expense, which is investing in Defense. Work on open borders. Pakistanis then have a billion people market to do business with. Countries from around the world fighting to enter this market. You guys are bordering this market. Simple economics. Earn more - Spend less
@Thiru "What can China do? Take away CPEC infrastructure brick by brick back? They just have to write off these loans."
No. They will ask Pakistan to give rights over Gwadar port and use it as a naval base. No different from what they did with Sri Lanka. They may also demand prime agricultural land to be turned over to China.
It is not cash loan but commodity loan. Which means Pakistani importer will be able to buy things with a deferred payment with interest for 3 year. The cash will be go to the Chinese exporter directly from Chinese bank with guarantee from pakistan. The wise can make out of it actually who gained double from this loan. Pakistan will be able reduce import bill saving dollars but Chinese will get interest, pro fit of businesd and job in their mainland.
This is part of "debt trap diplomacy" which rich nations plays with a weaker one !
Why do we always have to look around for bail outs. When will we be self sufficient?
Financially strong Pakistan is in the interest of India also. China wants Pakistan to take more and more loans and later default on the payments. This will lead up to Chinese acquiring assets to cover up their loans.