[The Express Tribune 23 April, 2019]

ISLAMABAD: Pakistan has decided to keep the terms of foreign commercial loans secret, in a bid to hide details of Chinese loans, which may further deepen the transparency concerns. The Pakistan Tehreek-e-Insaf (PTI) government has dropped the details of $3.7 billion commercial loans from the Statistical Supplement of the Pakistan Economic Survey 2017-18, shows the document of the Ministry of Finance. Out of $3.7 billion loans, China had provided $2.2 billion worth of commercial loans.

The decision raises fears that the government would also not disclose the terms of $2.54 billion Chinese foreign commercial loans in the upcoming Economic Survey of Pakistan for fiscal year 2018-19. China had disbursed the $2.54 loans last month to stabilise the official foreign exchange reserves. The China Development Bank gave $2.24 billion in short-term loan while the Industrial and Commercial Bank of China (ICBC) also disbursed $300 million in March.

Another set of official documents show that Pakistan had contracted $3.7 billion worth of foreign commercial loans in fiscal year 2017-18. The official documents show that out of $3.7 billion, China had provided $2.2 billion through its three commercial banks. Till May last year, China had provided $1 billion at an interest rate of three months floating London Interbank Offered Rate (Libor) plus 2.75%. The details of $1 billion loan by the Industrial and Commercial Bank of China (ICBC) were provided in the Economic Survey of 2017-18. But even these terms have been dropped from the Statistical Supplement 2017-18. Besides, the Bank of China had given $200 million and the China Development Bank $1 billion in June last year.

The terms of Chinese loans has also remained one of the sticking points between Pakistan and the International Monetary Fund (IMF). The IMF has not backed out from its demand of a complete disclosure of all types of financial cooperation between Pakistan and China.

The economic cooperation between Beijing and Islamabad is not only limited to the China-Pakistan Economic Corridor (CPEC). Pakistan has launched projects of national importance with Chinese assistance including those related to infrastructure development, nuclear power plants, joint manufacturing of JF-17 Thunder fighter aircraft and procurement of submarines.

The IMF is seeking the details of Chinese deals on the pretext of debt sustainability analysis, as it has estimated that the country’s debt-to-GDP ratio would peak to over 83% by 2023. Pakistan’s debt sustainability indicators have significantly worsened during the past two years — some have already crossed the red line including short-term debt and maturing debt within a year.