Pakistan plans to ask China for debt relief for power projects (report)

  • Pakistan seeks debt relief from China’s power projects loan
  • China-funded power plants in Pakistan were originally intended to solve Pakistan’s electricity shortages
  • But the country now finds itself in a surplus it cannot afford

Pakistan is considering debt relief on Chinese loans taken to finance energy projects that Beijing has funded for the past eight years.

Pakistan is the latest developing country to struggle to repay its debt under President Xi Jinping’s Belt and Road Initiative, says Bloomberg report.

The publication says the two countries discussed easing debt repayment terms for a dozen power plants in informal talks. Islamabad has not yet made a formal request, according to the report.

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The parties examined Beijing’s willingness to stagger debt payments, rather than slash stock returns, a person familiar with the plan quoted in the Bloomberg report said.

The Chinese-funded power plants in Pakistan were originally intended to solve power shortages in Pakistan. But the country now finds itself in a surplus that it cannot afford.

China’s initiative-funded infrastructure projects in other developing countries, such as Sri Lanka and Malaysia, have suffered from problems ranging from heavy debt to corruption.

A spokesman for the Chinese Foreign Ministry said he was not aware of Pakistan’s plan to seek debt relief.

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“The energy projects have provided Pakistan with a large amount of stable and low-cost electricity, effectively reducing the overall price of electricity in Pakistan,” the spokesperson said in a written response.

“China-Pakistan energy cooperation has progressed smoothly and brought real economic and social benefits,” the response said.

Pakistan’s power division made no comment.

The publication said China had previously denied US criticism that the initiative led to debt traps, while acknowledging that countries have had difficulty repaying loans due to the pandemic-induced global recession. .

Beijing last year canceled interest-free loans to 15 African countries that were due to mature in late 2020, and delayed other payments.

Read more: China launches forward warship for Pakistan (report)

Chinese financing of the Belt and Road in Pakistan has focused on the electricity sector.

The Belt and Road program found new life in Pakistan last year with the signing of $ 11 billion in projects, most of which went to renovate the country’s rail system.

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