Sri Lanka debt and CPEC

[Kabira]

Example of Sri Lanka is given when people say to Pakistan to be careful about China investment. Not just foreigners but also opposition parties in Pakistan.

What exactly happened? Apparently Sri Lanka debt was so high that now 95% of their tax revenues goes to debt serving?

This will obviously not happen to Pakistan because tax revenues will increase to $39b next year and $80-100b by 2023. CPEC loan is $11 which Pakistan will have to pay starting 2022 over period of 25 years.

But I was wondering why Sri Lanka got fucked? How can you function with just 5% of tax revenues? By taking more loans I guess.

 

[Jlaw]

Example of Sri Lanka is given when people say to Pakistan to be careful about China investment. Not just foreigners but also opposition parties in Pakistan.

What exactly happened? Apparently Sri Lanka debt was so high that now 95% of their tax revenues goes to debt serving?

This will obviously not happen to Pakistan because tax revenues will increase to $39b next year and $80-100b by 2023. CPEC loan is $11 which Pakistan will have to pay starting 2022 over period of 25 years.

But I was wondering why Sri Lanka got fucked? How can you function with just 5% of tax revenues? By taking more loans I guess.

Because the lsnkie government pocketed some of the money meant for projects. Blame it on the corrupted.

 

[Radio Mirchi]

This will obviously not happen to Pakistan because tax revenues will increase to $39b next year and $80-100b by 2023. CPEC loan is $11 which Pakistan will have to pay starting 2022 over period of 25 years.

Thats how the chinese lured the Srilanka selling them fake dreams that Hambantota will be next Singapore and it will take the sheen out of Mumbai and how the revenues will sky rocket overnight and the debts will be just like peanuts to be paid. But reality was different.

Because the lsnkie government pocketed some of the money meant for projects. Blame it on the corrupted.

Well I can foresee Chinese blaming the corruption of Pakistani Govt. for Pakistan getting into a massive debt trap after a few years just like they are blaming Sri Lanka now.

 

[ckf]

Thats how the chinese lured the Srilanka selling them fake dreams that Hambantota will be next Singapore and it will take the sheen out of Mumbai and how the revenues will sky rocket overnight and the debts will be just like peanuts to be paid. But reality was different.


Well I can foresee Chinese blaming the corruption of Pakistani Govt. for Pakistan getting into a massive debt trap after a few years just like they are blaming Sri Lanka now.

How can China sell a dream to Lankans when they actually initiated the Hambantota project and offered India first to build it. Indians knows Lankans well but still spreading China fear syndrome when in fact China is getting screwed by the Lankans...China build the port and air port, employs tens of thousands of Lankans and paid billions to Lankan contractors. Even though China owns the facilities through dubious default by the Lankan government(nobody pay taxes and corruption on every level of politics)...billions of loans have to be written off. What a sweet deal for the Lankans...Why does China do it...because it takes balls to invest long term and achieve strategic objectives...which something Indians are sorely lacking in...big kahunas to accept losses.

 

[Sine Nomine]

Example of Sri Lanka is given when people say to Pakistan to be careful about China investment. Not just foreigners but also opposition parties in Pakistan.

What exactly happened? Apparently Sri Lanka debt was so high that now 95% of their tax revenues goes to debt serving?

This will obviously not happen to Pakistan because tax revenues will increase to $39b next year and $80-100b by 2023. CPEC loan is $11 which Pakistan will have to pay starting 2022 over period of 25 years.

But I was wondering why Sri Lanka got fucked? How can you function with just 5% of tax revenues? By taking more loans I guess.

Pakistan will be even in worst condition then that,debt is for sure and all bloody revenue is just blabbering by Government and our jingoistics masses on social media.

 

[Max]

like Qanas, i am too sceptical about CPEC and more loans, we should not allow Chinese free run in our country, i think we should stop loans here at 11 biillions, i as Pakistani appriciate Chinese investement of 35 billion in energy sector..

 

[AnnoyingOrange]

Example of Sri Lanka is given when people say to Pakistan to be careful about China investment. Not just foreigners but also opposition parties in Pakistan.

What exactly happened? Apparently Sri Lanka debt was so high that now 95% of their tax revenues goes to debt serving?

This will obviously not happen to Pakistan because tax revenues will increase to $39b next year and $80-100b by 2023. CPEC loan is $11 which Pakistan will have to pay starting 2022 over period of 25 years.

But I was wondering why Sri Lanka got fucked? How can you function with just 5% of tax revenues? By taking more loans I guess.

Why only Sri lanka. even Tajakistan had to surrender 11000 Sq KM of its terriroty to China for a mere 700 Million Dollar Loan ... http://www.eurasianet.org/node/79401

 

[illusion8]

Example of Sri Lanka is given when people say to Pakistan to be careful about China investment. Not just foreigners but also opposition parties in Pakistan.

What exactly happened? Apparently Sri Lanka debt was so high that now 95% of their tax revenues goes to debt serving?

This will obviously not happen to Pakistan because tax revenues will increase to $39b next year and $80-100b by 2023. CPEC loan is $11 which Pakistan will have to pay starting 2022 over period of 25 years.

But I was wondering why Sri Lanka got fucked? How can you function with just 5% of tax revenues? By taking more loans I guess.

Pakistan signed in to be a debt ridden country for 3 decades. .its a known risk that both pakistanis and the Chinese investors have taken, that's how businesses operate.

It remains to be seen how it pans out for you guys. But going by the state of affairs and the corruption and law and order issues you guys have, the risk factor is much higher for Pakistan than it was for Sri Lanka.

 

[sbh02]

Pakistan's GDP to debt ratio is currently at 66.5% (India's is currently at 69.5%). The lowest our GDP to debt ratio went down to was in 2007, at 56.4%; and the highest it went to was 87.9% in 2001.

Sri Lanka's GDP to debt ratio is currently at 79.3%, far higher than Pakistan, which is why they were feeling the effects more.

The list of nations with a greater GDP to debt ratio are Japan (250.4%), Greece (179%), Lebanon (146%), Italy (132.6%), Portugal (130.4%), Jamaica (128.4%), Cape Verde (123%), Bhutan (118.6%), Singapore (112%), Cyprus (107.8%), Belgium (105.9%), USA (104.17%), Spain (99.4%), France (96%) and many many many more countries.

The situation of Pakistan's economic debt obligations getting stretched is highly exaggerated. Pakistan is the 42nd worst country in the world in terms of the debt to GDP ratio, but no where near the worse ones out there. There are many many nations that should be a lot more worried than Pakistan.

While Pakistan's debt will increase with the CPEC project, the investments in the project will spur the economy, the GDP growth rate can rise by 2.5-3%. Hence, it can rise from 5% to 8% when we start bearing the fruits of the project.

The overall GDP figure will hence rise quicker than the debt we owe, which will bring the GDP to debt ratio down in the future.

 

[ckf]

Why only Sri lanka. even Tajakistan had to surrender 11000 Sq KM of its terriroty to China for a mere 700 Million Dollar Loan ...

Land itself has no soverignity and value, only perceived value and ownership...Tajikistan got a great deal since nobody wanted that land anyways and tens of billions needed to build the gas fields which is currently not viable....Alaska was sold by the Russians for peanuts since they can't defend the claim anyways. Tajikistan and Sri Lanka got money, infrastruture, jobs, technology, investments for their land leases, great deal for them. Pakistan bought entire Balochistan for 3 million USD post independence and now they are leasing a port and 1500 hectares for 50 billions, that's quite a return on investment that Buffet envies intently. I don't know why Pakistan government should be concerned about the debt since lack of infrastructure investment is really the root of all developing nations. Its like if somebody offer you 100 millions dollars to buy your dream house and you have 30 years to pay...Should you be worried? no, the lender should be scare to death though. I will be laughing to the bank.

 

[sbh02]

Pakistan signed in to be a debt ridden country for 3 decades. .its a known risk that both pakistanis and the Chinese investors have taken, that's how businesses operate.

It remains to be seen how it pans out for you guys. But going by the state of affairs and the corruption and law and order issues you guys have, the risk factor is much higher for Pakistan than it was for Sri Lanka.

Fiscal spending in terms of infrastructure spending have a multiplier effect, they spur economic growth.

China and India are on extreme ends when it comes to infrastructure spending. While Chinese spending on roads and power exploded since late 1990s, India stagnated. India not only spent less (focusing on expanding their services sector), but were highly inefficient too.

 

[Radio Mirchi]

How can China sell a dream to Lankans when they actually initiated the Hambantota project and offered India first to build it. Indians knows Lankans well but still spreading China fear syndrome when in fact China is getting screwed by the Lankans...China build the port and air port, employs tens of thousands of Lankans and paid billions to Lankan contractors. Even though China owns the facilities through dubious default by the Lankan government(nobody pay taxes and corruption on every level of politics)...billions of loans have to be written off. What a sweet deal for the Lankans...Why does China do it...because it takes balls to invest long term and achieve strategic objectives...which something Indians are sorely lacking in...big kahunas to accept losses.

India knew the business prospects of Hambantota and hence backtracked. Had we done that the Lankans would be doing the same to India what they are doing to China today. And let me tell you China is going to write off many a loans in CPEC and yes the only reason China is doing it is for "strategic reasons". We both agree on this point at least.

Fiscal spending in terms of infrastructure spending have a multiplier effect, they spur economic growth.

China and India are on extreme ends when it comes to infrastructure spending. While Chinese spending on roads and power exploded since late 1990s, India stagnated. India not only spent less (focusing on expanding their services sector), but were highly inefficient too.

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Thanks for the statistics. Comparisons with China inspires us to grow.

 

[ckf]

India knew the business prospects of Hambantota and hence backtracked. Had we done that the Lankans would be doing the same to India what they are doing to China today. And let me tell you China is going to write off many a loans in CPEC and yes the only reason China is doing it is for "strategic reasons". We both agree on this point at least.


Thanks for the statistics. Comparisons with China inspires us to grow.

The "strategic reasons" for CPEC is too dissolve Anglo American hedgemony in Asia through developing asian consumer markets, promoting Asian currencies, creating interdependence and reducing regional conflects. I am not sure Indian government truly understand the scope and depth required in the long run too carved out strategic equilibrium globally. India as a whole really doesn't benefit from joining the Anglo-american hedgemeny at all, yet successive government still relishes colonial servitude since the ruling elites actually benefit individually from colonial ties.

 

[Radio Mirchi]

The "strategic reasons" for CPEC is too dissolve Anglo American hedgemony in Asia through developing asian consumer markets, promoting Asian currencies, creating interdependence and reducing regional conflects. I am not sure Indian government truly understand the scope and depth required in the long run too carved out strategic equilibrium globally. India as a whole really doesn't benefit from joining the Anglo-american hedgemeny at all, yet successive government still relishes colonial servitude since the ruling elites actually benefit individually from colonial ties.

Every nation knows about its national interests. In the time of globalization talking about regional equilibrium perhaps suits chinese national interests. Our only major concern about CPEC is that it passes through our territory under illegal occupation of Pakistan. Would China join an economic corridor from India to Vietnam that passes through Arunachal Pradesh?

 

[Chhatrapati]

Yeah, another example is Laos a country with $ 12.3 billion GDP. China is building $ 6 billion project, while they have no guarantee on how they pay back such a massive sum. The option Laos has is to give away their mineral resources.
New game of economic colonization.