ISLAMABAD: A high-level delegation of Chinese companies visiting Islamabad this week has shown “keen interest” in building a special economic zone (SEZ) in the northern Gilgit-Baltistan region, state-run Radio Pakistan reported on Thursday.
GB is administered by Pakistan as an administrative territory and consists of the northern portion of the larger Kashmir region, which has been the subject of a dispute between India and Pakistan since 1947. The impoverished, remote and rugged mountainous territory borders Afghanistan and China and is the gateway of the $65 billion China-Pakistan Economic Corridor (CPEC) infrastructure plan. But the region has so far reaped few rewards.
“Pak-China border region has significant economic and cultural importance, with trade and cultural exchanges between the two regions dating back centuries,” Pakistani Minister for Kashmir and GB Affairs, Amir Muqam, was quoted by Radio Pakistan as saying after he hosted the Chinese delegation led by renowned economist Yuan Jianmin Senior in Islamabad.
Muqam said investing in Gilgit Baltistan could benefit both China and Pakistan and foster economic growth, regional connectivity and a stronger partnership.
“The delegation showed keen interest in construction of a Special Economic Zone in Gilgit Baltistan,” Radio Pakistan added.
GB locals fought pro-India forces and opted to join Pakistan in 1948. But since then Gilgit-Baltistan has not been granted full inclusion by the Pakistani constitution over fears doing so would jeopardize Islamabad’s international stance that all of Kashmir is disputed territory.
The local assembly has few powers. Pakistan’s National Assembly and Senate have no representation from Gilgit-Baltistan, and the region receives only a fraction of the national budget.
The CPEC project had aimed to bring development to the region but that has not happened, a consequence, many residents believe, of the lack of local representation at national levels.
New roads, two hydroelectric power plants, a fiber-optic Internet line, and a special economic zone to boost industrial activities have all been proposed as part of the CPEC project since 2013, but none have been materialized so far.
The only substantial project from the China-Pakistan partnership has been the construction of the Karakoram Highway, completed decades ago.
Pakistan says China wants to build special economic zone in Gilgit-Baltistan
https://arab.news/gmqry
Pakistan says China wants to build special economic zone in Gilgit-Baltistan
- Mountainous territory is the gateway of the $65 billion China-Pakistan Economic Corridor infrastructure plan
- CPEC project had aimed to bring development to the region but proposed projects have not taken off so far
Islamabad dismisses claims about paying up to 8 percent interest on foreign loans as ‘misleading’
- Pakistan has long relied on external loans to help bridge persistent gaps in public finances and foreign exchange reserves
- Pakistan’s total external debt, liabilities stand at $138 billion at an overall average cost of around 4 percent, ministry says
KARACHI: Pakistan’s finance ministry on Sunday dismissed as “misleading” claims that the country is paying up to 8 percent interest on external loans, saying the overall average cost of external public debt is approximately 4 percent.
Pakistan has long relied on external loans to help bridge persistent gaps in public finances and foreign exchange reserves, driven largely by a narrow tax base, chronic trade deficits, rising debt-servicing costs and repeated balance-of-payments pressures.
Over the decades, successive governments have turned to multilateral and bilateral lenders, including the International Monetary Fund, the World Bank and the Asian Development Bank, to support budgetary needs and shore up foreign exchange reserves.
The finance ministry on Sunday issued a clarification in response to a “recent press commentary” regarding the country’s external debt position and associated interest payments, and said the figures required contextual explanation to ensure accurate understanding of Pakistan’s external debt profile.
“Pakistan’s total external debt and liabilities currently stand at $138 billion. This figure, however, encompasses a broad range of obligations, including public and publicly guaranteed debt, debt of Public Sector Enterprises (both guaranteed and non-guaranteed), bank borrowings, private-sector external debt, and intercompany liabilities to direct investors. It is therefore important to distinguish this aggregate figure from External Public (Government) Debt, which amounts to approximately $92 billion,” it said.
“Of the total External Public Debt, nearly 75 percent comprises concessional and long-term financing obtained from multilateral institutions (excluding the IMF) and bilateral development partners. Only about 7 percent of this debt consists of commercial loans, while another 7 percent relates to long-term Eurobonds. In light of this composition, the claim that Pakistan is paying interest on external loans ‘up to 8 percent’ is misleading.
The overall average cost of External Public Debt is approximately 4 percent, reflecting the predominantly concessional nature of the borrowing portfolio.”
With respect to interest payments, public external debt interest outflows increased from $1.99 billion in Fiscal Year (FY) 2022 to $3.59 billion in FY2025, representing an increase of 80.4 percent, not 84 percent as reported. In absolute terms, interest payments rose by $1.60 billion over this period, not $1.67 billion, it said.
According to the State Bank of Pakistan’s records, Pakistan’s total debt servicing payments to specific creditors during the period under reference were as follows: the IMF received $1.50 billion, of which $580 million constituted interest; Naya Pakistan Certificates payments totaled $1.56 billion, including $94 million in interest; the Asian Development Bank received $1.54 billion, including $615 million in interest; the World Bank received $1.25 billion, including $419 million in interest; and external commercial loans amounted to nearly $3 billion, of which $327 million represented interest payments.
“While interest payments have increased in absolute terms, this rise cannot be attributed solely to an expansion in the debt stock,” the ministry said. “Although the overall debt stock has increased slightly since FY2022, the additional inflows have primarily originated from concessional multilateral sources and the IMF’s Extended Fund Facility (EFF) under the ongoing IMF-supported program.”
Pakistan secured a $7 billion IMF bailout in Sept. 2024 as part of Prime Minister Shehbaz Sharif’s efforts to stabilize the South Asian economy that narrowly averted a default in 2023. The government has since been making efforts to boost trade and bring in foreign investment to consolidate recovery.
“It is also important to note that the increase in interest payments reflects prevailing global interest rate dynamics. In response to the inflation surge of 2021–22, the US Federal Reserve raised the federal funds rate from 0.75-1.00 percent in May 2022 to 5.25–5.50 percent by July 2023. Although rates have since moderated to around 3.75 percent, they remain significantly higher than 2022 levels,” the finance ministry said.
“The government remains committed to prudent debt management, transparency, and the continued strengthening of Pakistan’s macroeconomic stability,” it added.
