Updated 11:29 AM EDT, Tue, Jun 16, 2020

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Pakistan to Pay China $90B for CPEC Projects: Report

President Of Pakistan Mamnoon Hussain Visits China

(Photo : Getty Images) Chinese President Xi Jinping (L) shankes hands with Pakistan President Mamnoon Hussain (3nd-R) at The Great Hall Of The People on September 2, 2015 in Beijing, China.

Pakistan needs to pay China $90 billion over a span of 30 years against the loan and investment portfolio worth $50 billion under the China-Pakistan Economic Corridor (CPEC), Tribune reported citing an estimate from a brokerage house.

The amount increased to $54 billion after it included more projects such as the Pakistan Railways and Karachi Circular Railways project. The volume of return is slated to increase accordingly. Other projects including infrastructure and power initiatives are expected to be completed by 2030.

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"Average annual repayment of CPEC will be $3 billion. [However, in medium term] between fiscal year 2020-25, it will range between $2.0-$5.3 billion with average payment of $3.7 billion," Saad Hashemy, an analyst from Topline Securities, said in a report.

Hashemy further noted that CPEC is financed by both Chinese companies and banks, and about 25 percent of CPEC investment is expected to come in Pakistan. The report entitled "Pakistan's External Account Concerns and CPEC Repayment" argued that repayment will be manageable in spite of the added debt servicing and repatriate of profits.

The finances for additional repayment will come from the anticipated export surge, import decrease, and increase remittances.

The report also forecasts exports to increase by 4.5 percent a year until fiscal year 2025, up 1.5 percent from the previous decade's average. Imports, on the other hand, are also expected to grow by 4 percent, while remittances to increase between 4 percent and 4.5 percent, lower than the last couple of decade's average of more than 7 percent.

According to Arif Habib Limited, CPEC-related transportation will likely earn from $400 to $500 million per year to Pakistan, enough to cover its repayments.

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