The economists suggest the name of China's newly-established Asian Infrastructure Development Bank (AIDB) as the Government of Pakistan would be looking for long-term financing of at least $12 billion to undertake various infrastructure related projects under China-Pakistan Economic Corridor (CPEC). The suggestion came from Dr Ishrat Hussain, former governor State Bank of Pakistan who presently is serving as dean of Institute of Business Administration (IBA).
To a question at a budget seminar, the economist explained that the investment of $46 billion under CPEC bilateral agreements between the governments of China and Pakistan would be materialized over the next 15 years. "It is a 15-year program," he told the Budget Discussion Forum held here at Karachi Press Club Saturday. The volume of investment under CPEC, Dr Ishrat said, would stand at $3 billion per annum. Asked if the $46 billion venture would in anyway reflect on Pakistan's federal budget, the former central banker replied that it would but partially.
A major chunk, around $34 billion, of the total would come in the form of private investment that, Dr Ishrat said, could be categorised as foreign inflows. "This would have no impact on the budget," he said. The balance $12 billion, he said, would be arranged through long-term government-to-government project financing from international lenders. "They are negotiating concessional loans that have extended grace period and lower interest rate," the economist said.
AIDB, which is believed to be a competitor of the Bretton Woods institutions like International Monetary Fund and World Bank, might be the best choice for the Government of Pakistan, Dr Ishrat suggested. The Chinese bank, he said, was offering loans for extended periods of up to 40 years with a 10-year grace period. "So they should wait and go to this bank which is set up for the very purpose of infrastructure development," the IBA dean said.