Caixin
Oct 18, 2018 03:09 PM
DAILY CHART

Charts of the Day: China Denies It’s to Blame for Pakistan’s Soaring Debt

China has denied its lending to Pakistan for infrastructure projects caught the country in a debt trap, after Islamabad reached out to the International Monetary Fund (IMF) for a billion-dollar bailout package.

The cash-strapped country has made a formal request to the IMF for an aid package between $6 billion to $12 billion this month. If passed through, this will be Pakistan’s 13th IMF loan package since 1988.

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Pakistan’s foreign debt reached $95.1 billion in the second quarter, up 40% since the IMF’s $6.6 billion loan to the country in September 2013, according to the State Bank of Pakistan.

Pakistan has been a key part of China’s Belt and Road Initiative. Under the China-Pakistan Economic Corridor (CPEC) program, the Pakistani government was granted Chinese loans to build billions of dollars of infrastructure projects, from railways to roads, according to CPEC data.

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China does not publish data on the size or conditions of its loans to Pakistan, which has led to criticism over the opaque nature of the deals.

China’s Foreign Ministry said in a statement (link in Chinese) Monday that “the debt caused by corridor construction accounts for a very low proportion of Pakistan’s debt, and certainly is not the cause of the current financial difficulties in Pakistan.”

It also said China wants the IMF to make a fair assessment of Pakistan’s debt situation.

Contact reporter Charlotte Yang (yutingyang@caixin.com)

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