China seeks additional guarantees for $6b new loan
China has sought additional guarantees before sanctioning $6 billion loan for Main Line-1 (ML-1) project due to weakening financial position of Pakistan and also proposed a mix of commercial and concessional loan against Islamabad’s desire to secure the cheapest lending.
The issue of additional guarantees was raised during the third joint ML-1 financing committee meeting, held ten days ago, official documents said.
However, a senior Pakistani official involved in negotiations said that China did raise the additional guarantees issue during meeting but it did not make it part of the draft of the minutes shared with Pakistan.
The ML-1 project includes dualisation and upgrading of the 1,872km railway track from Peshawar to Karachi and is a major milestone for the second phase of China-Pakistan Economic Corridor (CPEC).
The purpose of raising the additional guarantees issue was getting more clarity after Pakistan availed G-20 countries debt relief initiative, he added. The draft minutes have not yet been signed by both the countries.
The third round of financial negotiations gave further clarity on the Chinese position on $6 billion lending for the $6.8 billion strategically important ML-1 project of Pakistan Railways, sources in the Ministry of Economic Affairs said.
The Chinese authorities asked for additional guarantee mechanism after Islamabad sought debt relief from G-20 countries, which was only meant for poorest nations of the world.
The G-2- nations have also imposed conditions that the poor countries would not secure expensive commercial loans, except those allowed under the IMF-WB framework.
The Chinese authorities have proposed that “keeping in view the financial situation in Pakistan so also the conditions laid down by the G-20 re
