Addressing the CPEC Logistics International Forum in Rawalpindi, Pakistan’s Chief of Army Staff General Qamar Javed Bajwa, asserted that the economic corridor will be a catalyst for economic advancement. Bajwa said that CPEC will provide better integration between China and Pakistan and will be a welcome boost to industrial and urban development. But, is it all positive news for Pakistan or is there another side we are not hearing about?
CPEC will bring a lot of employment and development for the two countries but there is also some risk involved. Corruption on both sides of the partnership is driving the costs of the project higher, pushing Pakistan further into debt. Despite the introduction of a transparency commission, the project continues to be hindered by side dealings and allegations of improper transactions.
External debt in Pakistan is swelling. A combination of persistent current account deficits and external debt has put the country in a vulnerable situation. External debt moved up to 75,747 USD million in the first quarter of 2017, and if you add in the dwindling foreign exchange reserves and the deficit in foreign capital outflows the picture is worrying.
Adding to the problem is the Nawaz Sharif corruption scandal which is scaring off foreign investors. If you compare the capital and financial deficit of $989 million recorded in the first quarter of 2017 with the average of $782.17 million in the period from 2011 to 2017 you can see that this lack of transparency and high level of corruption is harming the economy.
However, it is not all doom and gloom. Under the remit of the partnership Lahore will get a redeveloped airport—making it the largest in the country. And, real estate in Gwadar and other cities along with route are receiving a welcome boost. “We have seen an uplift in online searches for property in Gwadar, Peshawar, and Multan,” said Saad Arshed—managing director of Lamudi Pakistan.“ “Many satellite cities are now on the map thanks to CPEC and the improved road and rail networks,” Arshed mentioned.
In addition, jobs will be created, and vital infrastructure will be created which will encourage foreign direct investment in the future. As foreign companies see an improvement in key transport and energy infrastructure, they will be encouraged to pour more money into Pakistan. If the government can mitigate the risk of corruption and ensure that the main projects of CPEC run smoothly; the debt imbalance might sort resolve itself in the coming years.