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Pakistan third largest beneficiary of Chinese uplift funding

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  • 98% funds are loans, while 2% are given in grants.
  • 8% funds were official development assistance.
  • $70.3 billion committed by China from 2000 to 2021.

KARACHI: Pakistan remains the third largest recipient of development financing by China in the world, as the Asian nation contributes to building the infrastructure in the country with a majority of the investments being loans and not grants.

The information was revealed in a study by AidData, a United States-based research lab, which added that 98% of Chinese development funding was invested in the form of loans with just 2% handed over as grants in the last two decades — 2000 and 2021.

“Out of the total Chinese development finance portfolio of $70.3 billion, committed between 2000-2021 in Pakistan, 8% was official development assistance (grants and highly concessional loans) and 89% was other official sector loans,” AidData mentioned in its latest released data.

The China-Pakistan Economic Corridor (CPEC), a global infrastructure and investment initiative with over $45 billion in projected investments, was launched in 2013 and is thought to be the largest partnership of Beijing’s Belt and Road Initiative (BRI). It increased to over $62 billion over time, and at least $25 billion was invested in Pakistan.

With $14.0 billion in finance commitments, 2017 was the top year for Pakistan; following a decline in 2018, the amount increased again in 2019 and 2020, even with the pandemic. With a 9.84-year maturity and a 3.74-year grace period, the average interest rate on loans is 3.72%, it added.

In Pakistan, the top three sectors from 2000 to 2021 were energy (40%, or $28.4 billion), general budget support (30%, or $21.3 billion), and transportation and storage (14%, or $9.7 billion).

The top three industries throughout the (BRI) era (2014–2021) were transportation and storage (13%, $7.2 billion), general budget support (30%, $16.08 billion), and energy (43%, $23.29 billion).

Pakistan and China have a long history of economic collaboration, and this year marks ten years of such ties. It has helped Pakistan through all of its tough economic downturns and crises.

But it’s worrying that Chinese less-than-generous loans coupled with Pakistan’s mismanagement have made Pakistan’s debt load even higher.

Dr Ammar A Malik, who is a senior research scientist at AidData, said between 2000-2021 Pakistan received 161 official sector loans from China worth $68.92 billion, making it the third-largest Chinese loan portfolio in the world. This includes $28.13 billion in rescue lending, including currency swap debts taken by the State Bank of Pakistan and deposits from SAFE and Chinese state-owned commercial banks.

AidData estimates that Pakistan’s outstanding public and publicly guaranteed debt to China stands at $67.22 billion, which is 19.6% of GDP, and $21.2 billion more than what Pakistan has officially reported to the World Bank’s Debtor Reporting System.

“In terms of the composition of debt from China, since 2018 China has pivoted away from infrastructure lending toward emergency lending in Pakistan, ensuring that the earlier debts taken on by Pakistan for energy, transport, and other CPEC projects can be repaid on time and with interest,” Malik said.

“As compared to the Zardari and Sharif years from 2008 until 2017, when energy and transport sectors dominated, during the PTI government between 2018-2021, the single largest sector was general budget support, which showcases the pivot in China’s economic relations with Pakistan that moved from infrastructure-heavy lending into emergency lending for rescuing Pakistan’s economy.”

According to the details on the implementation of Chinese-financed projects in Pakistan from 2000 to 2021, only three projects totaling $452 million out of 127 infrastructure projects worth $38.80 billion have been cancelled or suspended as of yet. Estimates from AidData show that environmental, social, and governance (ESG) hazards have been present in 52% of this portfolio of infrastructure projects.

The energy industry has seen the most difficulties in terms of ESG risks, with 51% of the portfolio dealing with one or more of these issues.

Pakistan is the largest beneficiary of China’s energy investments in Asia, and it holds the largest global proportion of the Belt and Road Initiative’s transport and storage projects.

With an energy portfolio valued at $28.4 billion, Pakistan has the largest in Asia, surpassing both Vietnam ($21.7 billion) and Indonesia ($17.9 billion). Globally, it is ranked highest, above both Angola ($24.7 billion) and Vietnam ($21.7 billion). It accounts for 10.2% of China’s total energy portfolio worldwide, which is distributed among several nations.

Pakistan has one of the largest transport sector portfolios in the world, with $9.69 billion worth of highways, bridges, and other supporting infrastructure.

AidData’s research indicates that China is investing more in Pakistan than the US.

China has surpassed the United States in foreign development financing more times than any other country since 2012, outspending it by 1.6 times in 2013, 7.7 times in 2016, and 22.4 times in 2021.

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April FDI in Pakistan increased to $358.8 million, according to SBP

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The inflow for April was $358.8 million, up 177% from $132 million in April FY23. Still, that was 39% more than the $258 million from March.

China was the largest investor, with $439.3 million in FDI from the nation between July and April of FY24—the greatest amount—as opposed to $604 million during the same period of FY23. In April, China accounted for $177 million of the total investment.

With $51.93 and 51.89 million invested in Pakistan, the United Arab Emirates and Canada came in second and third, respectively.

The power industry was the main draw for foreign investors in FY24, which ran from July to April. This period’s FDI in the power industry was $637.5 million, compared to $776.2 million the previous year. From $338 million to $460 million this year, Hydel Power garnered more attention.

Continue reading: In FY23–24, Pakistan’s per capita income increased to $1680.

According to a separate data released on Wednesday, Pakistanis’ per capita income increased to $1680 in FY2023–2024.

The size of the national economy grew from $341 billion to $375 billion in the current fiscal year, according to figures made public by PBS.

Throughout this fiscal year, Pakistanis’ yearly per capita income increased by Rs 90,534; the monthly rise was Rs 7,544.

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OGRA forbids the purchase or sale of inferior LPG cylinders.

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The 313 LPG marketing and 19 cylinder-producing companies received notices from the OGRA, which described the act of refilling inferior LPGO cylinders as harmful.

Avoid supplying LPG to unlicensed distributors, the OGRA has cautioned LPG marketing companies. Only approved distributors will be able to sell and buy LPG going forward, per the notification, which states that new SOPs have been developed for the LPG industry.

Additionally, the warning said that the decision was made in an effort to preserve both lives and the business in response to an increase in cylinder blast occurrences.

Price reductions of Rs 20 per kilogramme for liquefied petroleum gas (LPG) were implemented in Quetta on May 3.

There is a reduction of Rs 20 on LPG prices, which means that the price per kilogramme drops from Rs 280 to Rs 260.

The costs of LPG were reduced by Rs 20 per kilogramme earlier, bringing the total decrease to Rs 40 per kilogramme over a few weeks. This is something worth noticing.

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PIA announces a significant student discount.

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According to an airline spokesman, the national flag carrier has recently raised the baggage allowance to 60 kg.

Currently, PIA flies one flight per week on Sundays between Islamabad and Beijing.

The discount may be useful to students who intend to spend their summer vacations in Pakistan or who wish to return home after earning their degrees.

Before, students who wanted to visit China could now receive a 27% reduction on their fares through PIA.

On Eid ul Fitr, the national flag airline also reduced the cost of domestic flights by 20% for both economy and executive economy classes.

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