US Senators : Pak At Risk of Debt Over Trade Corridor Project With China

Washington: Recently, Pakistan warned by US Senators due to the rising current account damage and external obligations linked to the China Pakistan Economic Corridor or CPEC. Expressing the concern over bailout request by countries that fall in China’s Debt Sixteen US senators including David A Perdue and Patrick Leahy have written to Secretary of State Michael Pompeo and Secretary of Treasury Steven T Mnuchin.

With a warning, It is said that the new Pakistan Prime Minister Imran Khan has already designated it may pursue a bailout by the International Monetary Fund. On the basis of analysts, it raised concerns that Pakistan may use bailout money to repay CPEC debt.

Given an example of Citing Sri Lanka One of the Senators noted that “this financial crisis illustrates the dangers of China’s debt-trap diplomacy and its Belt and Road Initiative (BRI) to developing countries, and it also shows the national security threat they pose to the United States.” the team of the Senators also mentions that the behavior of the Chinese as a creditor has not been subjected to the disciplines and standards that other major sovereigns and other multilateral creditors have adopted collectively, and in the process, debt levels and dependence on China rising”  

According to the internal sources, it is said that the Global Development has estimated that of the 68 countries hosting BRI funded projects, 23 are at risk debt distress and in eight of those countries, future BRI- related financing raises serious issue concerns about debt sustainability.

Pak At Risk Of Debt Over Trade Corridor Project With China US Senators | tnbcliveus.com

                                                                                                                       A team of US Senators

On the matter Senators wrote “ In, Djibouti, As China, for instance, has provided more than $ 1.4 billion in infrastructure funding, equivalent to 75 percent of Djibouti’s GDP. In addition, most of the capital comes in the form of loans forms of loans from the Export-Import bank China.”

It further mentioned that IMF evaluations stress the extremely risky nature of Djibouti’s borrowing program, noting that public external debt has increased from 50 to 85 percent GDP, the highest income of Low- income country.”

The letter said, “ As Djibouti increases its dependence on China, there are fears that China will gain control of the Doraleh Container Terminal, further consolidating China’s influence in the critically strategic region”.

by Priti on September 4, 2018

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