$2 billion cut from China's 'silk road' in Karachi-Peshawar road project due to debts: Pakistan
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The project was hit over cost leading the Pakistan government to rethink the 1,872 km road infrastructure deal.
Pakistan today cut the size of China's "Silk Road" by $2 billion due to rising debt constraints, Railways Minister Sheikh Rasheed said.
"Pakistan is a poor country that cannot afford huge burden of the loans," Rasheed said, adding,"therefore, we have reduced the loan from China under CPEC for rail projects from $8.2 billion to $6.2 billion."
The project was hit over cost leading the Pakistan government to rethink the 1,872 km road infrastructure deal.
China has been a big investor in Pakistan with investments of over $60 billion in China-Pakistan Economic Corridor (CPEC). However, recent reports have suggested the deal has led to large-scale debts for the Pakistan government, already reeling under huge current account deficit.
Rasheed said the government remains "committed" to the Karachi-Peshawar Main Line-1 (ML-1) project but asserted that he wishes to further reduce the cost to $4.2 billion from $6.2 billion.
"CPEC is like the backbone for Pakistan, but our eyes and ears are open," Rasheed said.
Pakistan's Army chief General Baig who had recently visited China had assured government officials in China on over the viability of the CPEC.
But US Senators last month had flagged concern over risk of debt distress due to rising current account deficit and external debt obligations stemming from the CPEC project. The Centre for Global Development has estimated that of the 68 countries currently hosting BRI-funded projects, 23 countries are at risk of debt distress.
Last year, the Sri Lankan government, after being unable to repay over $1 billion of Chinese debt for construction of the Hambantota Port, granted a Chinese state company, a 99-year lease on the facility.
"In China's String of Pearls strategy for the Indo-Pacific, Gwadar and Hambantota are important footholds that if converted into naval bases will enable the PLA Navy to maintain a permanent presence in the Indian Ocean," the US Senators had said.