CPEC investment to cross over USD 50 BN, create millions of jobs

ISLAMABAD: Minister for Planning, Development and Special Initiatives Asad Umar has said that investment under the China-Pakistan Economic Corridor (CPEC) is expected to be of around $50.7 billion, which would generate massive economic activities and employment opportunities.

In a written reply to a question of a member of the National Assembly, the minister said this investment is focusing on energy, infrastructure and Gwadar projects, nine Special Economic Zones would be established under the CPEC portfolio, which would create tremendous job opportunities and technological transformation.

He said the ML-l Railway Project to upgrade and dualise the rail track from Peshawar to Karachi (1,872 km) has a potential to create 174,000 direct jobs.

He said in the second phase (2021-25) of the CPEC, investments would also focus on industrialization, agriculture modernization, socio-economic development and cooperation in science and technology.

He said that Special Economic Zones (SEZs) at Rashakai, Khyber-Pakhtunkhwa, Allama Iqbal Industrial Zone in Faisalabad and Dhabeji, Thatta, are in different stages of development.

He said the textile of Pakistan has been at almost full-capacity production, taking advantage of the government’s withdrawal of duties and taxes on import of raw cotton.

He said that statistics have shown that the government has recreated half a million jobs by strengthening the textile industry.

The minister said the government hopes that the Ravi City Project costing Rs5 trillion (USD 30 billion) would create millions of jobs as at least 40 industries are connected to the construction sector.

In a written reply to the question of a member of National Assembly, Minister for Finance and Revenue Shaukat Fayaz Ahmed Tarin said that the International Monetary Fund (IMF) loan under Extended Fund Facility (EFF) for Pakistan 2019-22 is of around $ 6 billion.

Of this amount, the government has received approximately $1.9 billion till date, he said.

He said the programme supports the government’s economic reform agenda, which aims to address structural imbalances in the economy for sustainable and inclusive growth in future.

He said the reform measures aim to improve (i) fiscal discipline; (ii) debt sustainability; (iii) tax base and revenue generation; (iv) cost recovery in the energy sector; (v) performance of state-owned enterprises (SOEs); and (vi) the effectiveness of AML/CFT regime.

The minister said that Rapid Financing Instrument (RFI) amounting to approximately $1.38 billion was availed in April 2020.

It provided the necessary fiscal space to the government to mitigate the negative human and economic impact of the pandemic, he said.

He said the interest on IMF loans varies according to the SDR interest rates, and the level of utilisation of quota by a member country.

He said that presently, average interest rate is in the range of 1.82-2.0 percent.

With regards to the World Bank, the minister said the government has secured disbursement of $1.455 billion as loan under 29 projects having total committed value of $7.387 billion since August 2018.

The minister said that financing terms of World Bank loans are as under: IDA Financing Interest Rate = 1.25% p.a Service Charge = 0.75% p.a Commitment Charge = 0 to 0.5% p.a (currently zero) Repayment Period = 25 years including 5-year grace period.

During a question-hour session of the National Assembly, it was informed that the government has decided to import wheat and sugar to avoid shortages of these essential items and hikes in their prices.

Responding to a question, Parliamentary Secretary for Finance Zain Hussain Qureshi said four million metric tons of wheat and a “sufficient” quantity of sugar would be imported to maintain strategic reserves of these commodities.

Answering another question, Zain Qureshi said the government is taking steps to transform the banking system into Sharia-compliant banking.

He said 3,456 branches and over 1,000 windows are offering Islamic banking across Pakistan.

He said the State Bank of Pakistan has made it mandatory for commercial banks to reserve 10 percent loans for small and medium enterprises (SMEs) and eight percent for the agricultural sector interest free.

Answering supplementary questions of the members, Parliamentary Secretary for Commerce Aliya Hamza Malik said Pakistan’s exports are increasing by 13.4 percent and have reached 21 billion dollars during the first 10 months of the current fiscal year, “which is unprecedented in the history of Pakistan.”

She expressed the hope that the exports will touch the mark of 25 billion dollars in coming days.