Pakistan is eyeing for debt relief on Chinese loans taken to fund power projects that Beijing has financed over the last eight years.
Pakistan is the latest developing nation that’s struggling to repay debt under President Xi Jinping’s Belt and Road Initiative, according to a Bloomberg report.
The publication said the two countries have discussed easing terms on the repayment of debt on about a dozen power plants in informal talks. Islamabad has yet to make a formal request, the report said.
The parties have canvassed Beijing’s willingness to stagger debt payments, as opposed to lowering equity returns, a person with knowledge on the plan was quoted as saying in the Bloomberg report.
Chinese-financed power plants in Pakistan were originally intended to solve Pakistan’s power shortages. But the country now finds itself in a surplus that it can’t afford.
Infrastructure projects funded by China’s initiative in other developing nations, such as Sri Lanka and Malaysia, have suffered issues ranging from heavy debt loads to corruption.
A spokesperson at China’s Ministry of Foreign Affairs said they aren’t aware of Pakistan’s plan to seek debt relief.
“Energy projects have provided Pakistan with a large amount of stable and low-priced electricity, effectively reducing the overall price of electricity in Pakistan,” the spokesperson said in a written response.