China’s $50 billion investment in Pakistan was hoped to be the game changer that would save the country from the brink of economic disaster. However we are not only still awaiting to see the good effects, the economy seems to be very badly managed creating serious questions among economists about whether any benefits will be squandered.
Last week, National Assembly was informed that external debt has soared by $5.3 billion since the last three years. Last month, Bloomberg warned that Pakistan is risking default on billions in debt. Ahsan Iqbal announced that Pakistan needs 7-8 per cent growth for next 10 years in order to accommodate the population growth, but since 2011 Pakistan has not achieved even 5 per cent growth.
Will CPEC be able to turn this around? Economists are privately expressing worry as they are seeing important indicators that all is not well. In power sector which is closely linked with CPEC, circular debt continues to rise despite rising costs imposed on consumers.
Many had hoped that even though much of the CPEC investment would actually be spent on contracts with Chinese companies, Pakistan would benefit from the taxes. However, this too appears to have been a pipe dream as China has demanded exemptions from taxes paid to Pakistan. Meanwhile, Pakistan is spending countless sums to provide security for Chinese workers.
CPEC may be a game changer for Pakistan, but only the future will tell if it is a change for the better or for the worse. So far, the only thing rising in Pakistan are the costs.