Foreign Office debunks claims about CPEC debt

Statement says public debt relating to CPEC projects is less than even 10% of total debt

ISLAMABAD: The Foreign Office said on Friday the claims made by some of the commentators and public officials on Pakistan’s debt obligations relating to the China-Pakistan Economic Corridor (CPEC) were contrary to the facts.

The statement came after Alice Wells, the outgoing US Assistant Secretary of State for South and Central Asia, had raised serious questions about lack of transparency in the multibillion-dollar China-Pakistan Economic Corridor (CPEC).

She had called on China either to waive or renegotiate what it called “unsustainable and unfair” debt of Pakistan.

“At a time of crisis like Covid-19, it is really incumbent on China to take steps to alleviate the burden that this predatory, unsustainable and unfair lending is going to cause to Pakistan,” she said while addressing a farewell news briefing through a video link attended by journalists from South and Central Asia.

In a statement, the Foreign Office said that CPEC was a flagship project of the Belt and Road Initiative (BRI), adding that it was a transformational project that was contributing positively and transparently to Pakistan’s national development.

US urges China to waive off Pakistan's debt amid Covid-19 crisis

“Economic development and long-term prosperity of the people is our government’s top priority, read the statement. “Pakistan believes that regional economic connectivity will provide a critical stimulus for creating broad-based growth across the region,” it added.

“We have reiterated many times that our total public debt relating to CPEC projects is less than even 10% of the total debt. Moreover, the public debt obtained from China has a maturity period of 20 years and the interest is 2.34%,” the statement said.

“If grants are included, the interest value slides down to about 2%. The claims made by some of the commentators and public officials on Pakistan’s debt obligations relating to CPEC are contrary to facts.”

The Foreign Office reiterated that CPEC was a long-term project that helped address development gaps in energy, infrastructure, industrialisation, and job creation.

“Pakistan and China have several mechanisms to discuss matters of mutual interest. Both countries are regularly in touch to address those issues bilaterally,” it added.

The statement stressed that Pakistan and China were “all-weather strategic cooperative partners”, engaged in prompting peace, development and stability in the region based on the principles of mutual respect, mutual benefit, win-win cooperation and shared development. “Our ties are based on deep mutual trust and understanding,” read the statement.

China, Pakistan friendship remains ‘firm as a rock’

This was not the first time the US, Wells in particular, publically questioned the viability of CPEC. Wells in the past also expressed similar views, declaring CPEC detrimental to Pakistan’s economy.

China always dismissed the US claims and instead challenged Washington to match its economic assistance to Pakistan.

Ambassador Wells, who is retiring this week, said the US supports CPEC and other development projects as long as they meet international standards, uphold environmental and labour standards.

“I enumerated my concerns and the United States government’s concerns over CPEC, over the lack of transparency involved in the project, over the unfair rates of profits that are guaranteed to Chinese state organisations to the distortions it caused in the Pakistani economy including by the massive imbalance in the trade Pakistan now has with China,” she argued.

Pakistan has been seeking debt relief from G20 countries to offset the negative fallout of coronavirus on its economy.

The passengers included The Urban Unit CEO Khalid Sherdil, who had previously served as the Punjab industries secretary.  He had also remained the Balochistan labour secretary. He held multiple degrees in computer science from the US and Canada.