ISLAMABAD: International Monetary Fund (IMF) on Wednesday warned Pakistan about the negative impact of $60 billion China-Pakistan Economic Corridor (CPEC) projects and be aware of the challenges it could face in repayment of loans.
The IMF team headed by Harald Finger, its Washington-based mission chief is visiting Pakistan and held a meeting with officials of Ministry of Finance and Ministry of Planning & Development, reported Express Tribune.
The purpose of this visit is to assess Pakistan’s capability of repaying back the $6.1 billion outstanding loans to the IMF. CPEC related interest payments from Pakistan’s end will start within the next 1.5 years and would inflate after 2020, eating earnings equal to 0.4 per-cent of Gross Domestic Product (GDP).
In the start. CPEC related payments from Pakistan are expected to constitute only 0.1 per-cent of GDP a year, according to country authorities. According to IMF forecasts, these payments will spike up after seven years to touch $3.5 billion to $4.5 billion a year. IMF estimates CPEC-linked outflows at 1.6 per-cent of GDP a year by 2024.
The Washington-based lender voiced concern that it doesn’t expect increase in exports soon due to rupee being strong against the dollar and Pakistan’s repayment capacity will remain weak.
Pakistan authorities apprised the IMF the $8.2 billion ML-I project of Pakistan Railways was being delayed and taking time to mature, whose influence shouldn’t be included in CPEC linked outflows.
IMF was informed value of CPEC projects wasn’t more than $46 billion and only $23 billion projects had till now matured. Shoaib Siddiqui, Secretary Planning & Development said detailed calculations were carried out regarding CPEC-linked outflows and no liquidity problems have been foreseen.
Siddiqui admitted foreign currency reserves need to be shored up. Sources revealed IMF said balance of payments would remain under strain due to CPEC related outflows and overvalued rupee would not allow exports to rise.
