Little evidence China forcing countries, including Pakistan, into debt — report

A view of the strategic Gwadar port in southwestern Pakistan on October 4, 2017. The port is part of a $62 billion corridor of energy and infrastructure projects China is building in Pakistan.(REUTERS)
Updated 16 May 2019
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Little evidence China forcing countries, including Pakistan, into debt — report

  • Belt and Road Initiative to rebuild Silk Road met with widespread criticism it will saddle countries in unsustainable debt traps
  • China sees critics as harboring anti-Chinese prejudice, wishing to contain the country’s rise

ISLAMABAD: There is little evidence that China’s Belt and Road Initiative is ensnaring nations, including Pakistan, in foreign aid “debt traps,” a Pakistani think tank said in a report this week, in defense of a key policy platform of President Xi Jinping. 
Xi has made the Belt and Road Initiative (BRI), as it is formally called, one of the cornerstones of his administration. But it has run into opposition in some countries over fears that opaque financing arrangements lead to unsustainable debt and that it is more about promoting Chinese influence than bringing development.
China has at times reacted angrily to such doubts, tending to characterize critics as harboring anti-Chinese prejudice and wishing to contain the country’s rise, while overlooking what Beijing says are genuine good intentions.
The Belt and Road scheme seeks to build a modern version of the Silk Road to link China with Asia, Europe and beyond through large-scale infrastructure projects.
A new report by Pakistani think tank Tabadlab titled ‘Belt & Road Initiative (BRI): Belted on a road to debt?’ identified eight countries at high risk of the potential impact of BRI pipeline projects and associated debt levels. These are Pakistan, Djibouti, The Maldives, Lao PDR, Montenegro, Mongolia, Tajikistan and Kyrgyz Republic. The report said these nations would face rising debt-to-GDP ratios in excess of 50 percent, which merits concern.
“While the sustainability of infrastructure financing is critical for regional economic stability, there is little evidence that China is forcing countries into such [debt] crises,” the Tabadlad report said. 
“The financing agreements have largely been structured as bilateral transactions without the involvement of multilateral institutions and their corresponding economic assessment and monitoring frameworks,” the report said. “In short, a lot of the BRI project financing does not come with the conditionalities that World Bank, Asian Development Bank, African Development Bank, Inter-American Development Bank, and other multilateral financing sources come with.”
In the case of Pakistan the report said: “In addition to sovereign loans, financial instruments used for development of economic corridors [by China] also include concessional loans, commercial loans and equity investments. As an example, the China Pakistan Economic Corridor (CPEC), a flagship BRI investment, has USD 19 billion in investments to date of which over 60% is commercial lending and equity investments with no sovereign anchors.”
Last month, at the vast Belt and Road Forum in Beijing, China was keen to show that the initiative was even winning acceptance in Western nations, especially after Italy became the first G7 country to sign on last month. Britain’s finance minister, France’s foreign minister and Germany’s economy minister all made the trek to Beijing for the event, but reminded China of the need for high standards and transparency.
“The IMF has repeatedly and explicitly questioned opaque lending and demanded more transparency from countries and Beijing to bridge information asymmetry around Chinese debt,” the report said. “In the most recent case of Pakistan, details of debt arrangements with China were a major negotiation bottleneck. Making details of BRI projects more public would certainly help counter the debt-trap narrative.”
Citing China’s takeover of the Sri Lankan port of Hambantota as part of a debt servicing swap, the primary example of fears of asset seizure and control that can be potentially exercised by China over strategic infrastructure across continents, the report called it a rare and often misunderstood example. 
“Despite being a creditor enjoying quite a strong position, negotiations have largely benefited borrowing countries with various treatments afforded to countries for restructuring or settling debt,” the report said. “Negotiations have often resulted in the extension of loans, the restructuring of terms and even wholesale re-financing. Interestingly, write-offs, both partial and full, have been the most common solution to debt problems in these negotiations.”
Using the Rhodium Group’s data and analysis, the Tabadlab report said 36% of debt servicing negotiations with China had resulted in write-offs worth approximately $6.5 billion and 7% of the debt arrangements having a value of $23.5 billion were refinanced, constituting 52% of total debt in 40 sample cases.


Mehwish Hayat to run UK marathon for schools in Pakistan's Sukkur

Updated 21 August 2019
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Mehwish Hayat to run UK marathon for schools in Pakistan's Sukkur

  • As a brand ambassador for Penny Appeal, Hayat hopes to raise funds for the rehabilitation of educational institutions in the area
  • She will be running 26.2 miles in the London Marathon in April next year

ISLAMABAD: One of Pakistan’s favorite actors, Mehwish Hayat, will be participating in the London Marathon to raise funds for impoverished schools in the Sukkur region of the Sindh province.
Hayat made the announcement in a Twitter post which she shared a few days ago along with a video clip of her interview with the BBC network, explaining her new role with the UK charity group, Penny Appeal, and her goal to raise funds for schools in Pakistan. 
The actress has been in the news of late for sharing her thoughts on the negative portrayal of Pakistan by global film industries, including Bollywood.
It follows an exchange of views between Bollywood actress Priyanka Chopra and a Pakistani American citizen, Ayesha Malik, at a recent event, the video of which has now gone viral.
Hayat is a recipient of Pakistan’s Sitara-I-Imtiaz – a civilian award which recognizes Pakistanis who have excelled in their respective fields – and was honored with the pride of performance award in Norway a few weeks ago.
As a brand ambassador for Penny Appeal, she will be using her new role to help rebuild five schools for 900 children.
Penny Appeal, which is an Islamic Charity group, is functional in more than 30 countries and provides aid to people in war-torn and impoverished circumstances. Hayat will be collaborating with them for the “Run for Pakistan” initiative, with the website accepting donations for the cause now.