KARACHI: In a move to allay US concerns over China-Pakistan Economic Corridor (CPEC) impact on Pakistan’s debt crisis, the newly-appointed federal Minister for Planning and Development Asad Umar on Saturday said the bilateral commercial debt from China would start declining in two to three years.
However, he made it clear that Pakistan would neither back out from the CPEC and its time-tested friends like China nor would it become a “collateral damage” of any conflict between major powers.
The minister expressed the resolve during a press conference at the Karachi Press Club to counter the claims made by Assistant Secretary Alice Wells a day ago while addressing diplomats, scholars and journalists at the Wilson Center, a Washington think tank. She said the multi-billion-dollar CPEC would take a toll on Pakistan’s economy at the time of repayments and dividend in the coming years.
Mr Umar explained that Pakistan had already suffered “collateral damage” for nearly half a century only for others’ interest, but it could not afford to have such policy anymore, neither could any country “push” Pakistan into any “proxy war”. A major success of Prime Minister Imran Khan was the respect he had earned in the international community due to the balanced foreign policy that opened new avenues for the country, he said.
Asad Umar vows Pakistan will never become collateral damage of any proxy war
The federal minister shared facts and evidence from the original plan of the CPEC, which is set to enter its next phase, in response to a question about the future of the mega project particularly after the latest warning of the US regarding the project.
He said: “There is no doubt that there is an organised campaign against the CPEC both from in and outside the country. I can’t say whether the US is behind that campaign or not. What I can say is that we cannot step back from our friends especially from those who are time tested and helped us out at the time when we were in the deepest crisis of our history.
“We are seeing a tense phase of the US-China relations but we are not going to become part of any tussle. We can no more be collateral of any conflict between any forces.”
“She [Ms Wells] mentioned about the debt servicing, which is really a very big challenge for us,” the minister remarked. But he explained, “We took loan from China for the CPEC and some [borrowings] to meet the balance of payments crisis. Now we have signed the IMF agreement and our multilateral and bilateral lending are restored. Mainly after restoration of multilateral lending for non-projects by the ADB and World Bank, you would see in two to three years our bilateral commercial debt from China would start declining.”
In a speech, described as “unusually specific” by the international media, the top US diplomat for South Asia had warned that CPEC could push the country deeper into an already stifling debt burden, fostering corruption and repatriating jobs and profits to China.
Her warning came at a time when Washington and Islamabad are trying to rebuild their turbulent relationship. But Mr Umar questioned the authenticity of the facts behind her concern. About most of the points, he called, the information she shared with her audience was “not true”.
Mr Umar also referred to Ms Wells’ claim about the commercial loans from China that it had been offered to Pakistan at an inflationary rate even they were not long-term debt. The federal minister called her both claims untrue, citing figures of the agreement between the two sides.
“This is not true. The maturity of the public debt from China is 20 years. This is called a long-term debt. Secondly, the average interest rate on these debts is only 2.34 per cent. They are so much easy loans. If we include the grant element in the number of sum we are receiving from China, the interest rate further declines to two per cent,” he said.
The minister also questioned US Assistant Secretary’s “against the fact information” when he highlighted her claim that the CPEC project would restrict Pakistan’s industrial development as it would not move beyond infrastructure building.
“Let me say that this is not only incorrect but also her analysis is against the facts and ground realities,” he said.
“Our first phase of this project was infrastructure building and energy sector’s development, which has been completed. Now we are entering into a second phase which envisages nine Special Economic Zones in all the provinces and the groundbreaking of the first one is scheduled to be held in next few days in Rashkai area of Khyber Pakhtunkhwa,” the federal minister for planning and development announced.
Ms Wells had earlier challenged the notion that the CPEC would create jobs in Pakistan and claimed that CPEC relied primarily on Chinese workers and supplies, even amid rising unemployment in Pakistan. He wondered over the source of her information and shared facts related to the project that negated her claim. “One needs to know that we were only in the first phase of the project,” he said.
“The first phase was solely related to infrastructure investment. Everyone knows around the world that the investment over infrastructure is always a capital intensive which doesn’t create jobs. But it leads to industrialization which creates jobs. We have infrastructure in place and now we are moving to second phase which would lead to industrialization and create hundreds of thousands of jobs.”
Published in Dawn, November 24th, 2019