US says China should ease loan burden on Pakistan

By Huma Nisar and Muhammad Luqman

America’ top State Department official dealing with South Asia has called on China to alleviate the burden of its “predatory, unsustainable and unfair lending” to Pakistan in view of the economic hardships caused by the COVID-19 epidemic.

Alice G Wells, who spearheads U.S. engagement with Central and South Asian countries, pointed out some of the U.S. concerns over lack of financial transparency in the multi-billion dollars China-Pakistan Economic Corridor.

“I’ve enumerated the United States government’s concerns over the CPEC, lack of transparency involved in the projects and unfair rates of profit that are guaranteed to Chinese organizations,” she said.

“I think at a time of crisis like COVID, when the world is reeling from the economic consequences of having shut parts of the economy, it is really incumbent on China to take steps to alleviate the burden this predatory, unsustainable and unfair lending is going to cause to Pakistan,” she remarked.

Wells noted that the U.S. supports investment that meets international standards, upholds environmental and labor requirements and benefits the people of the region.

Gwadar Seaport Image:  Umargondal / Wikimedia Commons

She expressed the hope that Beijing would either waive off debt that Pakistan owes to it or renegotiate the loans to come out with a fair and transparent deal for Pakistani people.

The United States calls for China to offer transparent relief from the belt and road predatory loans that the countries are now suffering from, she added.

Meanwhile, reacting to the comments a Chinese Embassy spokesperson in Islamabad noted that Beijing knows the impact of the COVID-19 on Pakistan’s economy and said in comparison with Pakistan’s debt from multilateral institutions – which amounts to about 47 percent of its total external debt – while loans from the CPEC is only $5.8 billion, 5.22 percent of Pakistan’s total debt. “It has no pressure on Pakistan at all.

“Recently, the G20 members adopted a Debt Service Suspension Initiative for the Poorest Countries. China supported Pakistan to be included and is ready to provide relief. China will never force Pakistan to pay back the debts and China’s loans have no strings attached.”