Pakistan govt is struggling to repay, may seek debt relief from China Belt and Road loan

Pakistan is emerging as the latest developing country which is struggling to repay debt under President Xi Jinping’s Belt and Road Initiative.

In informal talks, Pakistan and China have discussed easing terms on the repayment of debt on about a dozen power plants, according to a person with knowledge of the matter, who said Islamabad hasn’t made a formal request yet.

The parties have canvassed Beijing’s willingness to stagger debt payments, as opposed to lowering equity returns, the person said, requesting anonymity as the plan is private, reports Bloomberg.

An enormous build-out of Chinese-financed power plants in Pakistan, which was originally intended to solve its electricity shortages, has resulted in a surplus that Islamabad isn’t able to afford.

Infrastructure projects funded by China’s initiative in other developing nations, such as Sri Lanka and Malaysia, have suffered issues ranging from heavy debt loads to corruption, Bloomberg reported.

A spokesperson at China’s Ministry of Foreign Affairs said they are not aware of the issues.

“Energy projects have provided Pakistan with a large amount of stable and low-priced electricity, effectively reducing the overall price of electricity in Pakistan,” the spokesperson told the newspaper in a written response.

“China-Pakistan energy cooperation has progressed smoothly and brought about real economic and social benefits.”