Govt urged not to constrain CPEC’s implementation

LAHORE: The Institute for Policy Reforms (IPR) urged the government not to allow the International Monetary Fund (IMF) to either constrain the size or pace of the implementation of the China-Pakistan Economic Corridor (CPEC).
“The IMF’s emphasis to execute CPEC within the overall envelope of the PSDP (public sector development program) is a euphemism for placing limits on its implementation,” said IPR, in its fact sheet.
The IPR said the CPEC will prove a potential ‘game changer’ for Pakistan.
“Clearly, there will need to be a big hump of public investment due to the CPEC in 2016-17, 2017-18 and thereafter,” it said.
Total 16 projects of the Pakistan Railways and the National Highway Authority have been included in the federal PSDP in 2015-16, said the IPR headed by renowned economist Dr Hafeez Pasha.
The combined cost of these projects is nearly Rs334 billion.
Based on figures provided by the government, IMF indicates that the overall investment under CPEC is about $45 billion. For energy projects, the outlay is $33.8 billion, equivalent to 75 percent of the total. The remaining $10.6 billion will be devoted to transport infrastructure.
Government plans to complete CPEC transport projects by 2017-18. In addition, priority projects in the energy sector, which will create independent power producers, are scheduled to add 10,000 megawatts by 2017-18.
The report said transport infrastructure projects will be financed by government-to-government longer-term loans on concessional terms.
Energy-related projects will be in the nature of foreign direct investment, financed by commercial loans from Chinese financial institutions to Chinese investors in Pakistan.
Further, the IMF wants the government to "prioritise the infrastructure project execution… within an overall fiscal envelope aimed at gradual debt reduction."
As such, the Fund emphasised that potential fiscal risks will need to be mitigated.