Debt Servicing of Pakistan: Capitalising on Chinese Investment

Abstract

Pakistan has several times turned to external sources for development and economic restructuring purposes. The amount of debt Pakistan has accumulated over the years is now becoming a serious challenge. Moreover, Pakistan has been unable to utilise the borrowed resources efficiently which has placed the economy under financial stress. This paper will examine how the China-Pakistan Economic Corridor (CPEC) can offer support in overcoming the mounting external debt problem of the country. It will look at various aspects of CPEC which can help Pakistan generate foreign exchange earnings and reduce import costs. It will also discuss how Pakistan can reduce its dependence on foreign debt and become a more resilient economy. This paper also explores the limitations of CPEC in helping the government overcome its debt crisis and offers recommendations for utilising the Chinese investment to address debt-obligation challenges faced by Pakistan. It argues that the government must apply a comprehensive strategy for servicing its external debt.