An erroneous report appeared in the media by end December stating that Pakistan has to pay China $40 billion over $26.5bn CPEC investments in 20 years. This report was widely circulated and reached such momentum that PID had to release a clarification regarding the matter. According to the official figures released by the government, China has committed a total amount of $6bn concessional loans for five infrastructure projects related to CPEC. These loans are scheduled to be repaid in 20 years starting from 2022. The total amount to be repaid is $7.457bn which includes principal amount of $6.035bn and interest of $1.422bn with an annualized payment of $350m.
These are low interest rate preferential loans with 20-year tenure and five years of grace period. Out of these loans $4bn has been received so far. China has also approved $375 million grant projects which include Gwadar International Airport and Gwadar hospital. Similarly, the Eastbay Expressway project is being financed through an interest-free loan of $168m. The net effective rate of interest on CPEC infrastructure projects is around two per cent per annum.
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