Considering Pakistan’s fragile economic situation, China has asked for an additional guarantee before approving the main line of railways for the railway project. China has proposed to offer commercial and discounted loans to finance the rail project, a media report said. According to the ‘Express Tribune’, the issue of additional guarantees arose 10 days ago (December 13) at a joint finance committee meeting for a main-rail project.
A senior Pakistani official, who attended the meeting, said China had raised additional warranties during the talks but that it was not included in the draft of details shared with Pakistan. Both countries have yet to sign documents. The main Route-1 project will be crucial to the second phase of the China-Pakistan Economic Corridor (CPEC), doubling the 1,872km rail line from Peshawar to Karachi.
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Pakistan has applied for debt relief from G20 countries, the official said. For this reason, China raised the issue of additional guarantees for the clarity of the country’s economic position. In the third phase of talks on financial matters, the conditions for the six billion dollar loan for the project have been clarified, sources in the finance ministry said. Under the relief package from the G20 countries, Pakistan will not be able to take commercial loans at a higher rate, except with the pre-approval of the draft International Monetary Fund and the World Bank.
In August this year, the Executive Committee of the National Economic Council (ECNEC) approved a strategically important Main Line-1 project to be built at a cost of Rs.8 6.8 billion. The ECNEC meeting lasted only 20 minutes and the economic and technical issues were not resolved. Sources said Pakistan wants to get 6 billion at one percent interest rate, while China has lent under the Commerce and Discount Sector.
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