Financial crunch hits CPEC in Pakistan, several projects stalled

Work on several projects, which are part of the China-Pakistan Economic Corridor (CPEC), has been stalled in Pakistan reportedly because of financial constraints. According to Pakistan-based Dawn News, the National Highway Authority in the country is under financial crisis and hence the work on several projects has been stalled.

The report said that cheques worth Rs 5 billion had bounced, following which the contractors decided to stop work on the road projects, which are crucial for the success and completion of the CPEC project.

Though there have been reports of threats to CPEC projects in the past, this is for the first time that they have been hit by financial crunch. As per Dawn News, the projects stalled are Hakla-Dera Ismail Khan, Western route of CPEC and Karachi-Lahore Motorway.

This comes months after China had raised concerns over political instability in Pakistan hitting CPEC projects. China had also raised concerns over the financial climate in Pakistan.

"In the past few years, investors from both China and Pakistan got too excited about the CPEC, and they overlooked the problems with the Pakistan economy," Mei Xinyu, a research fellow at the Chinese Academy of International Trade and Cooperation, had told the state-run Global Times in May.

"Now, they need to carefully assess potential risks in some projects, and Pakistan's ability to repay its debts," he had said.

The observations by the expert came after Pakistan asked China for fresh loans worth $2billion, even as Chinese banks had given $1 billion loan to the neighbouring country in the month of April.