Pakistan's Finance Minister Highlights Significance of Chinese Investment in Development

Pakistan's Minister of Finance, Muhammad Aurangzeb, discussed the importance of Chinese investment in Pakistan's development during his recent visit to Washington, D.C. Aurangzeb emphasized key projects like the China-Pakistan Economic Corridor (CPEC) and the Belt and Road Initiative as critical drivers of Pakistan's economic growth.

In meetings with Chinese Finance Minister Lan Fo'an on the sidelines of the IMF-World Bank Spring Meetings, Aurangzeb conveyed condolences over the recent terrorist attack against Chinese nationals in Pakistan. He reaffirmed Pakistan's commitment to ensuring the safety and security of Chinese citizens and investments in the country.

Aurangzeb praised China's contribution to Pakistan's development through initiatives like CPEC and support at international financial institutions. He discussed the progress of CPEC, stating that Phase I focused on infrastructure development, while Phase II would emphasize monetizing assets through the operationalization of Special Economic Zones and relocation of Chinese private-owned companies. "The government is resolved to accelerate Phase II of CPEC," Aurangzeb said.

Why this matters: The China-Pakistan Economic Corridor is a flagship project under China's Belt and Road Initiative, with over $60 billion in investments. The success of CPEC is seen as vital for Pakistan's economic development and strengthening ties with China, its close ally.

The Pakistani Finance Minister also expressed gratitude for China's SAFE deposits and their regular roll-overs, which have played a critical role in addressing Pakistan's external financing gaps. He informed the Chinese Minister that Pakistan aims to agree on the outline of a new IMF loan in May and looked forward to China's continued support.

During his visit, Aurangzeb also met with various officials and investors, including the World Bank's Regional Vice President for South Asia, the U.S. Department of Treasury's Deputy Under Secretary for International Finance, the President of the Asia Infrastructure Investment Bank, and the Managing Director of the International Finance Corporation. Discussions focused on Pakistan's reform initiatives, development priorities, and facilitating foreign investment through the Special Investment Facilitation Council.

Aurangzeb highlighted Pakistan's stable macroeconomic indicators, such as declining inflation, stable currency, strong growth in the agriculture sector, high remittances, rising foreign exchange reserves, and a buoyant stock market. He also outlined the government's priorities around taxation, energy sector reforms, and privatization.

Key Takeaways

• Pakistan's Finance Minister lauded China's investments in CPEC and Belt and Road Initiative.
• Pakistan conveyed condolences over recent terrorist attack on Chinese nationals and reaffirmed their safety.
• CPEC Phase II to focus on monetizing assets and relocating Chinese companies to Pakistan.
• Pakistan aims to agree on a new IMF loan outline in May, seeking China's continued support.
• Pakistan expressed desire to tap into Chinese bond market and launch Panda Bonds by 2025-26.