China rejects Pakistan’s debt risk affects CPEC

BEIJING: China has rejected the reports that Pakistan’s foreign exchanges reserves are in short and would affect China-Pakistan Economic Corridor, which is the flagship project of Belt and Road Initiative proposed by Chinese President Xi Jinping in 2013.

Chinese Foreign Ministry spokesperson Hua Chunying said on Wednesday, The Western media reports that Pakistan's foreign exchange reserves are in short supply or affect the infrastructure projects of the China-Pakistan Economic Corridor, the report is seriously inaccurate.

She was responding the question that some Western media quoted Pakistani officials as saying that the current debt risk of Pakistan has surged, and foreign exchange reserves are in short supply. It is hoped that China will continue to provide loans to the Pakistani side. Otherwise, the Pakistani side will once again seek assistance from the International Monetary Fund. If this happens, it may affect some infrastructure projects under the China-Pakistan Economic Corridor.

Hua Chunying replied that the report was seriously inaccurate. A few days ago, Pakistan’s Finance Minister Dr. Shamshad Akhtar has issued a statement to clarify, stressing that the Pakistani side would continue to push forward the construction of the China-Pakistan Economic Corridor. The Chinese side has noted the shortage of foreign exchange reserves in Pakistan and believes that the Pakistani side would overcome temporary difficulties and maintain stable economic development.

Hua Chunying said that in recent years, the China-Pakistan Economic Corridor has played a positive role in maintaining a high growth rate of the Pakistani economy and has received the full support of the Pakistani government and people.

“We believe that the corridor will be steadily advanced according to the consensus reached between China and Pakistan and will not be interfered by other factors,” she added.

According to some media reports, China has so far given an estimated loan of $5 billion to Pakistan to help temporarily stabilize reserve.

For the last few months, Pakistan’s economy has come under pressure and foreign exchange reserves are declining due to flared current account deficit. Pakistan has received foreign loans more than $44 billion during the last five years.

In May, Pakistan and China extended the currency swap agreement for three years, and the worth has been increased from 10 billion yuan to 20 billion yuan ($3.13 billion).