China Pakistan Energy Corridor

Will CPEC survive the IMF bailout? (By: Afshan Subohi)

By: Afshan Subohi

The staff report released by the International Monetary Fund (IMF) last week must have provided some measure of comfort to the champions of the China-Pakistan Economic Corridor (CPEC) as well as China that chose Pakistan to be the first key destination for the Belt and Road Initiative (BRI), which aims to sustain its economic triumph and realise future ambitions.

If this is just a coincidence, it is intriguing. After a long lull, there is light blipping again on the CPEC drawing board. Last Friday, a 55-member Chinese delegation of business executives met Prime Minister Imran Khan and reportedly committed to ploughing $5 billion investment over the next five years. “Probably the interaction with the Chinese delegations was already planned, but the fact that it did materialise as soon as details of the IMF deal were made public kindled new hope for the future,” commented a top leader of the government’s economic team.

In its staff report following the approval of a three-year $6bn bailout programme, the IMF mentions the repayment of $14.68bn due for $21.8bn bilateral and commercial loans that Pakistan owes to China. This is almost 24pc of the country’s total $85.8bn external debt and liabilities. The document states that the Chinese commercial debt will be fully retired by the end of the programme in 2022 while the bilateral debt ($15.5bn) will be almost half of what the country owes at this point to $7.9bn.

Essay Outline: China Pakistan Energy Corridor (CPEC)

The CPEC is a 3,000-kilometre network of roads, railways and pipelines to transport oil and gas from Gwadar Port to Kashgar city, northwestern China’s Xinjiang Uygur autonomous region, China Daily reports. China and Pakistan have agreed to build One Belt One Road project more commonly known as China-Pakistan Economic Corridor is expected to bring about both peace and prosperity in South Asia. This corridor will link between Kashgar in north-western China to Pakistan’s Gwadar port on the Arabian Sea near the border with Iran via roads, railways and pipelines. There are many internal and external challenges for Pakistan government to implement this multi-dollars project. However, it is a game changer project which will transforn1 the fate of Pakistan and will help Pakistan modernize. It will improve the economy and trade, enhance regional connectivity, overcome energy crises, develop infrastructure and establish people to people contacts in both the countries.

Proposed by Chinese Premier Li Keqiang during his visit to Pakistan in May 2013, the CPEC will act as a bridge for the new Maritin1e Silk Route that envisages linking three billion people in Asia, Africa and Europe.

The project links China’s strategy to develop its western region with Pakistan’s focus on boosting its economy, including the infrastructure construction of Gwadar Port, together with some energy cooperatton and investment programmes. It also involves road and railway construction including an upgrade of the 1,300-km Karakoram Highway, the highest paved international road in the world which connects China and Pakistan across the Karakoram mountains.