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Pakistan: IMF vs CPEC

Pakistan: IMF vs CPEC
Our final topic, picked by you, dear listeners, earlier in a poll on our Facebook page, is “Pakistan: IMF vs CPEC”, focusing on whether Islamabad’s forthcoming IMF-requested assistance will impact CPEC.

Pakistan has officially turned to the IMF for assistance in dealing with its financial crisis, but there are concerns that the global body might force it to curtail some of the projects that it agreed to with Beijing as part of the China-Pakistan Economic Corridor (CPEC), which is the flagship of China's Belt & Road Initiative (BRI). It was reported a few months ago that the country would have to disclose information about the terms of its Chinese contracts to its requested creditors if it wants to receive their help, which is very sensitive for two primary reasons. The first is the principle involved of having to show a third party the details of privately negotiated agreements, while the second builds upon that and has to do with the possibility of other players misportraying the actual terms themselves for whatever their political reasons may be.

Official Pakistani government data previously revealed that only around 10% of the country's external debt is due to Chinese loans while a whopping 60% of it is from either multilateral financial institutions or the Paris Club, though it's the Chinese component that's the most heavily politicized both inside and outside of the country. This is because there's been a lot of fearmongering over China's speculated geopolitical intentions with CPEC, which some allege is a form of "neo-colonialism" through "debt-trap diplomacy" that seeks to turn Pakistan into "another Sri Lanka" by compelling it to "surrender control" of its infrastructure in exchange for writing off its burgeoning debt like Colombo recently did with the controversial Hambantota port. Others say that these concerns are overblown and even deliberately misleading because of the geostrategic intent that some foreign forces have in subverting this game-changing series of multipolar megaprojects.

Separating fact from fiction, CPEC Project Director Hassan Daud wrote an article earlier this month titled "Removing The Mist" where he explained just how different CPEC loans are from any of China's others elsewhere along the Silk Road, which included details about their long-term financing plans and the Build-Operate-Transfer models being employed with many of them. Mr. Daud also importantly clarified that some of the loans that critics like to assail were actually procured by private entities and aren't the government's responsibility, so they can't reasonably be included in a tally of the state's total debt. Even so, it's worthwhile discussing the impact that Pakistan's requested IMF assistance may or may not have on the future of CPEC, if only for further debunking the many false and weaponized narratives against China's flagship Silk Road investment.

Andrew Korybko is joined by Syed Ali Zia Jaffery, Research Associate at the Center for Security, Strategy and Policy Research at the University of Lahore and Associate Editor of Pakistan Politico, and Sabena Siddiqi, Foreign Affairs Journalist focusing on the Belt and Road Initiative, CPEC and South Asia, who also works as an op-ed writer at, South China Morning Post and Asia Times.

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