Beijing seeks guarantees from Islamabad for $6 billion loan

ISLAMABAD: Pakistan's friendly neighbour China, which has time and again bailed it out of its financial crisis, has in a queer turn of events now demanded guarantees before sanctioning fresh $6 billion in loan to Islamabad.

Pakistan has sought the $6 billion loan help from China for Main Line (ML-1) project against which, Beijing has sought guarantees due to the Islamabad's weakening position.

China has also proposed commercial and concessional loan against Pakistan's desire to secure the cheapest lending.

However, a Pakistani government official stated that China did raise the additional guarantees issue during the third joint ML-1 financing committee meeting, though did not make it part of the draft of the minutes.

"The purpose of raising the additional guarantees issue was getting more clarity after Pakistan availed G-20 countries debt relief initiatives," said the government official.

"The draft minutes have not yet been signed by both countries," he added.

The demand of additional guarantees gained even more clarity after the third round of financial negotiations on the $6 billion loan for the $6.8 billion ML-1 project of Pakistan Railways.

China's demand has come in the wake of Pakistan, availing the debt relief from G-20 countries, which is only meant for the poorest nations of the world.

"The G-20 nations have also imposed condition that the poor countries would not secure expensive commercial loans, except those allowed under the IMF-WB framework," said the government official.

Another official, who was part of the ongoing negotiations for ML-1 loan, said that the G-20 regulations and conditions for debt suspension are the reason why China now seeks additional guarantees from Paksitan. (IANS)

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