The International Monetary Fund has termed Pakistan’s economic outlook as “favorable” with improved availability of energy, and growth-supporting structural reforms. According to latest report released by IMF, confidence of investors in Pakistan is growing as its economy has stabilized after completing a bailout program. It cited Chinese infrastructure investments as one of the reasons for economic development. Chinese investment in infrastructure projects will create lot of synergies for local entrepreneurs. It is basically an economic shift from unbalance growth strategy to balance growth strategy for Pakistan. Unbalance growth strategy restricted economic activities to fewer cities; it will be an automatic shift to balance growth strategy by virtue of CPEC. All sectors of the economy will have accelerator effect and homogenous growth pattern.
A Handout for Bureaucratic Fight for Survival
A delta of uncertainty is still disparaging; our economy needs quantum of solace. Look at the statistics at Pakistan stock exchange . Continuous downfall from the last few months. The stock exchange in Pakistan is a funny animal. Most of the monies and the fund managers are not Pakistani. They manipulate the ebb and flow of funds that makes them money. Investors are in an uncertain situation and foreign investors are withdrawing their money. Besides, erratic behaviour of stock exchange is just not comparable to a macro economic assessment of Pakistan by International Monetary Fund (IMF)! We’re drowning in debts every month. Exports have dropped significantly.
Why are the IMF and the global leaders warning of the risks to Pakistan’s economic stability and CPEC loan repayments?
The Silk Road/CPEC as an Energy Corridor
China has invested in Pakistan being a good friend and for mutual benefit. Thanks to Chinese government for uplifting the economy of our country. Regarding FDI the BOI data needs to be analyze. While some believe in 2020 and beyond the economy of Pakistan will expereince multiplier effect with 15 billion dedicated for infrastructure and 35 billion for Energy Projects. Right now the money has increased but in this proportion. Energy projects are badly needed and an improved infrastructure will attract investments and produce growth. In CPEC we are not building Burj al khalifa or tall buildings but basic necessary infrastructure which should have been built long ago. Pakistan has suffered decades of under investment that has hindered growth and industrialization. Remember that the CPEC is captured in the hand of Pakistan, which will gain more supports from the world and be the most important negotiating weight in the future.
Want to know the best part?
CPEC the bad OMEN
All that business growth for China, while Pakistan assumes all the risk and is liable for the $46 Billion loan. Suddenly the $46 Billion seems like loose change, which it is for China. But it is a mountain of a loan for Pakistan. Deception? Keeping in view the facts of above report, Pakistani business men currently doing their business abroad, now need to shift their business/investments in Pakistan. The IMF comes in the top 3 super pathetic institutes in the world at the moment. Sucking down economies and putting under developing countries under huge debts which will be paid across multiple generations. There is nothing to praise here. The success of CPEC depends on China’s economy remaining successful and free of global sanctions to freely move its goods to the rest of the world.
China never doles out freebies unless it has something to gain from it
Here’s the deal:
China has an established track record of arriving much like a horde of locusts and completely wiping out the local indigenous industry. The floodgates to Pakistan have been opened to the Chinese and it is just a matter of time before Chinese goods do the Walmart-effect on Pakistani industry and destroy what is left of it. Perhaps Pakistan could learn a lesson or two from neighbouring India’s “Make in India” initiative to not only sustain local industry but also master strategic technology in-house. Why has Pakistan become South Asia’s leader in economic development via CPEC for the next 50 years? Pakistani leadership, while obviously well-intentioned in CPEC, has shown immense immaturity, short-sightedness, and lack of good judgement in signing off on CPEC. As time will tell, the CPEC will soon become Atlas’s burden, a symbol for the world to see but for Pakistan to carry.
What’s the bottom line?
All in all, the CPEC can change the political structure of South Asia. Undoubtedly CPEC will help Pakistan to rise the international status,to better the geopolitical environment and to reduce the defense funds. Most importantly, the society will be more stable for the security issue will be no longer Pakistani own issue. All related countries will help Pakistan to clean up the terrorists. Pakistan’s economic sovereignty is essentially mortgaged to China – The CPEC is based on a $46 Billion loan that Pakistan has taken from China. It is not an FDI that China will recover from the proceeds of the CPEC. This certainty has recently turned suspect under the new US administration. What happens when the CPEC fails to generate the proverbial golden eggs? How does Pakistan propose to repay this loan?