Ministry of Finance says CPEC financing is concessional

December 31,2018

Reference news appeared in a section of media alleging Pakistan has to pay China $40 billion on $ 26.5 billion CPEC investments in 20 years.

It is clarified that infrastructure holds primary importance for economic growth and prosperity of Pakistan. Government of China has committed a total amount of US$ 6 billion concessional loans for 5 CPEC infrastructure projects.

These are low interest rate preferential loans with 20 years tenor and five years of grace period. Out of these committed loans US$ 4 billion has been received so far.

In addition to this, Government of China has approved US$ 375 million grant projects which include mega infrastructure projects like Gwadar International Airport and Gwadar hospital.

Similarly, Eastbay Expressway project is being financed through interest free loan of US$ 168 million. The net effective rate of interest on CPEC infrastructure projects is around 2% per annum.

It is clarified that these loans are scheduled to be repaid over a period of 20 years starting from 2022. The total amount to be repaid is US$ 7.457 billion which includes principal of US$ 6.035 b and interest of US$ 1.422 b with an annualized payment of US$ 350 million.

The reports carried by a section of media are based on speculation and conjecture and are far away from facts.