Market Watch

Lack of transparency in CPEC could foster corruption, resulting heavier debt burden for Pakistan: Alice Wells

US Acting Assistant Secretary for South and Central Asian Affairs Alice Wells on Thursday deemed China-Pakistan Economic Corridor (CPEC) not an aid to Pakistan but form of financing ensuring guaranteed profits for Chinese enterprises, a form of financing ensuring guaranteed profits for Chinese state-owned enterprises, and pointed out that the multi-billion dollar project is certain to take a toll on Pakistan's economy at the time of the repayment of the debt and dividend in the coming years. Speaking at an event at the Wilson Center on China's Belt and Road Initiative (BRI) in South and Central Asia, Wells said that the lack of transparency in the CPEC could foster corruption and increase the project cost, thereby resulting in an even heavier debt burden for Pakistan. Because it is clear or needs to be clear that CPEC is not about aid, this is almost always the form of loans or other forms of financing, often non-concessional with sovereign guarantees or guaranteed profits for Chinese State-owned enterprises that are repatriated to China," Wells said. "Now together with non-CPEC Chinese debt payment, China is going to take a growing toll on Pakistan's economy, especially when the bulk of payment starts to come due in the next four to six years. Even if loan payments are deferred they are going to hang over Pakistan's economic development potential, hamstringing Prime Minister Khan's reform agenda. The lack of transparency can increase CPEC cost and foster corruption, resulting in an even heavier debt burden for Pakistan," she added.
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