The Devil’s concerns
Well every time the World Bank, the IMF, and the World at large are on verge of declaring Pakistan as a failed state or a state nearing failure, this country has, miraculously, bounced back falsifying and managing to pull itself out of this false impression.
The International Monetary Fund (IMF) in a recent report expressed various concerns related to the CPEC, and its impact on Pakistan’s economic growth in the long term. In its cautious evaluation of the $51.5b landmark project, the IMF admitted that the CPEC and the projects initiated under its banner, would benefit Pakistan’s socio-economic progress in the short term, would entail the risks of repaying the heavy loans incurred in the longer run.
Viewing CPEC as an opportunity for Pakistan to boost its economy through investment and growth, the IMF cautions the government of ensuring sound project management and prioritisation mechanisms are in place to ensure timely completion of the project. The procurement process, in addition, must be kept transparent.
While acknowledging the reduction in economic instability and vulnerability, the IMF stated that there is a lot more to be done; Pakistan would require attaining and retaining an annual growth rate of seven percent, in addition to reducing the public sector losses and increasing the tax-to-GDP ratio.
Repayment of loans, among all possible problems, remained on top of IMF’s list of CPEC concerns as Pakistan’s public debt is increasing and will add gradually to debt repayment. The interest payments are also expected to rise after the fiscal year 2020-21.
Robust growth and export supporting reforms are necessary pre-requisites for Pakistan to reap optimal benefits of CPEC.
The comeback kid
Well every time the World Bank, the IMF, and the world at large are on the verge of declaring Pakistan a failed state or a state nearing failure, this country has, miraculously, bounced back falsifying and managing to pull itself out of this false impression.
Now, where after 10 years of dictatorial rule, and five years of despair democratic governance, the country once again finds itself in a similar scenario where there are question marks on its socio-economic progress, and criticism as being as failed state, Pakistan, again, has the opportunity to comeback, this time through China-Pakistan Economic Corridor (CPEC), a project being named as regional economic integration beyond geographical route, in collaboration with its longing friend and strategic partner China.
The pros and cons of this project are immense, and their impact will have long-lasting effects on Pakistan’s socio-economic progress in particular in both, short and long term, and the regions in general.
CPEC; the potential game changer
The IMF, despite of all its concerns, views CPEC as a potential game changer for Pakistan in the long run as it will pump investment and lift the potential output, provided implemented properly and managed carefully.
CPEC is a $51.5b project comprising 3,000 kilometers of roads, railway networks extending from Gawadar to Kashghar city. The project is based on mutual interest of both countries as China, in abundance of products and technology, needs access to markets to sell these products, and Pakistan on the other hand, being a country lagging in technological advancement and in requirement of investment and machinery for economic boost, and alleviation of unemployment and poverty.
CPEC, for Pakistan, aims at modernising the infrastructure and break critical bottlenecks in infrastructure which constrain long-term growth and development, while connecting major economic regions of Pakistan with a view to abate regional economic development gaps through the emergence of Node Cities as engines of growth. Upgrading development, particularly at the provincial level with the help of Chinese aid, and investment can be accomplished through CPEC.
Accomplishment of all of the aforementioned objectives could result in a high growth trajectory, would ensure food, water and energy security and improve the quality of life of the people and promote peace and stability in Pakistan, and the region at large.
The Chinese expectations from Pakistan here are rigorous, and Pakistan must strive to its fullest to live up to the expectations of its neighbouring friend.
Success; the critical conditions
Reaping the full benefits of CPEC is conditioned to provision of certain critical conditions. The government and the relevant authorities must work selflessly towards putting these conditions in place so that the desired outcomes may be achieved.
It is essential to overcome the weaknesses in governance as they could turn out to be the most significant risk factor in implementation. There must be fairness in state-market relations. Capacity of government authorities to improve and promote modernisation in the business environment must be enhanced. The discord between the economic and developmental models of both, Pakistan and China, must be bridged through greater cooperation.
Any failures on part of Pakistan to ensure the desired pre-requisites may jeopardise the fruition of CPEC, which certainly is not an option.
So are we really failing?
Definitely not, a simple answer. Pakistan’s resilience and potential to not fail is proven, and is recognised and acknowledged by the International bodies and agencies, including the International Monetary Fund (IMF), and this recognition provides them with the confidence to lend money and assist Pakistan financially in its time of need.
The question of CPEC being sustainable can be made, as the risks and challenges associated with it are real, however, the potential of this landmark project to uplift the economic, social, and strategic state of Pakistan cannot be over-shadowed by mere speculations and prophecies.
CPEC is expected to be a win-win initiative for both the countries. The investment and construction of energy and infrastructure projects under the umbrella of CPEC will both affect Pakistan and China in social, economic, cultural, and other resources. CPEC is not just another step in strengthening the time-tested ties between Pakistan and China, but an icebreaker for troubled relations with other regional counterparts as this strategic step would also be beneficial for them.
Pakistan and CPEC, definitely, are the future.
