China is Pakistan's new paymaster: A closer look at the Pakistani budget
File photos of Pakistani Prime Minister Shahid Khaqan Abbasi and Chinese President Xi Jinping. Photograph: (Reuters)
By Siddhant Sibbal
Pakistan's ruling PML(N) has presented its last budget with CPEC, terror and Afghanistan making their way into the papers. But where Pakistan is involved, so is geopolitics.
As always, Pakistan increased its defence budget. The Pakistani defence budget has been proposed at Pakistani Rs 1,100 billion for FY 2018-2019 as against the revised budget of Rs 999 billion for 2017-18.
And its no longer 3 A’s — Allah, America and the Army — but ACC — Allah, China and CPEC.
China-Pakistan Economic Corridor
CPEC found mention seven times in Pakistan Finance Minister Miftah Ismail's speech.
Lauding CPEC, Ismail said, “Vision of Mian Nawaz Sharif, CPEC initiative has become a global brand of Pakistan. As part of CPEC, our government initiated road projects that would link north of Pakistan with Gwadar. Trans-Pakistan corridor of motorways and special economic zones are designed to provide jobs, enhance manufacturing base, and increase prosperity and growth.”
He said that as part of CPEC, the Pakistani government has also finalised its plan to increase by three times the speed of trains on Main Line-I from Peshawar to Karachi.
Chinese loans replace US aid
China has already overtaken, by millions of Pakistani rupees, the US when it comes to loans granted to Pakistan, and this year it will grant even more. In FY 2018-2019, China will be giving loans and grants to Pakistan amounting to Pakistani Rs 98,395.783 million.
Of this, Rs 96,895.738 million will be in the form of loans while Rs 1,500 million will be in the form of grants. The US will be providing just Rs 13,523 million but all of it will be a grant. Clearly. most of the Chinese money being pumped into Pakistan is in the form of loans, the rates of interest on which are not known and nor are the tenures.
China however is well known for its loans ensnaring countries in debt traps.
South Asia has a lot of examples. The most famous one being Sri Lanka's Hambantota port of which China has been granted a 99-year lease.
China’s foreign investment has been called predatory and many in Pakistan itself believe that CPEC could turn Pakistan into a Chinese colony.
(The loans and grants provided to Pakistan.)
The AIIB link
Interestingly, the China-led AIIB (Asian Infrastructure Investment Bank) is also giving loans to Islamabad.
India, with a 7.6% share, is the second largest shareholder in the bank.
AIIB will be giving Pakistan loans totalling up to Rs 13,189 million. It’s a substantial increase from the Rs 5,289.609 given in FY 2017-2018. The new AIIB loan will be given for rehabilitation of the existing carriageway between the DI Khan-Saraigumble section, the Rajanpur-DG. Khan section, and Sehan-Ratodero.
Gwadar: China’s helping hand to the port
China and Pakistan's love child remains Gwadar.
Pakistan has been granted a Rs 200 million loan for fresh water supply and distribution at Gwadar, and a Rs 100 million loan for the upgradation of an existing 50-bed hospital to 300 beds at the port.
China has also made a Rs 1,000 million grant for the construction of the new Gwadar international airport.
China to help in Pakistan's space projects
Beijing will also be helping Pakistan in its space projects.
According to the Estimates of Foreign Assistance 2018-19, China will help Pakistan build a remote sensing satellite by giving it a loan of Rs 1,116 million space centres in Islamabad, Lahore and Karachi with a Rs 700 million loan and a multi-mission satellite (PAK SAT MM1) with a loan of Rs 850 million.
India had approached Pakistan to be a part of the South Asian satellite project, which Islamabad declined. All the other South Asian countries are part of the New Delhi-led project.
$126.79 billion: Cost of terror since 2001
The Pakistani economic survey has a special header “Annex-IV: Impact of War in Afghanistan and Ensuing Terrorism on Pakistan's Economy”.
The two pages talk of what Pakistan has been cribbing about for the last 20 years. That they are victims of terror, but without mentioning how they have provided safe haven to terrorists. According to the Economic Survey of Pakistan, in the last 17 years, the direct and indirect cost incurred by Pakistan due to incidents of terrorism totalled up to US$ 126.79 billion 10,762.64 billion in Pakistani rupees.
(The cost of terror paid by Pakistan.)
Afghan refugees are a burden: Economic Survey of Pakistan
The Pakistani economic survey says the country “continues to be a target of terrorism, including state-sponsored terrorism from its immediate neighbours”. It goes on to say Afghan refugees are a burden on the Pakistani economy. The survey said: “Hosting of millions of Afghan refugees not only burdened Pakistan’s economy but also put additional stress on its internal security situation. Pakistan continued to face terrorist attacks from terrorist hide-outs in Afghanistan.”
Nothing of course can happen without a bit of drama in Pakistan.
The Pakistani Finance minister Miftah Ismail was sworn in just a few hours ahead of the budget. A miffed opposition walked out. It may be recalled that Ishaq Dar was the Finance Minister until he voluntarily stepped down after a corruption case against him.