Funds not to settle dues of Chinese plants: Pak to IMF

ISLAMABAD: Pakistan has assured the IMF that it does not plan to allocate an additional budget to settle the $1.8 billion dues of Chinese power plants built under the China-Pakistan Economic Corridor, as the new government scrambles to revive the sinking economy, according to a media report.

An International Monetary Fund (IMF) team has been in Pakistan to complete the final review of the $ 3 billion Standby Agreement approved for the country last year before releasing the last tranche of $ 1.1 billion before the end of the programme next month.

The team has met officials who are also interested in getting a fresh loan to keep the dollar-starved nation’s economy afloat, The Express Tribune newspaper reported. The IMF inquired about the government’s decision to allocate funds for the Chinese power plants over and above the budgeted amount of Rs 48 billion for this fiscal year, said the Ministry of Energy officials. They added that the IMF was informed there was no plan to approve additional funds for retiring the outstanding debt of the

Chinese power plants, the paper said. The outstanding dues of power projects of the CPEC alarmingly increased to a record Rs 493 billion or $ 1.8 billion as of the end of January. The amount was Rs 214 billion or 77 per cent higher than June last year.

The CPEC connects Gwadar Port in Pakistan’s Balochistan with China’s Xinjiang province.

The build-up of Chinese debt violates the 2015 Energy Framework Agreement, which binds Pakistan to allocate sufficient money in a special fund to keep Chinese investors immune from the circular debt. The government is allocating only Rs 48 billion annually with a condition to withdraw Rs 4 billion per month.

The outstanding dues of power projects alarmingly rose to record $1.8 bn as of the end of January