Pakistan’s rail minister says the country’s largest Chinese-funded “silk road” rail project will have its budget cut by $2 billion, citing debt concerns.
The project to restore the aging 1,872 kilometer ML-1 rail lines from Karachi to Peshawar was initially priced at $8.2 billion, but concerns over the cost have led to delays.
The new government of populist Prime Minister Imran Khan has been cautious about taking on the rail projects, which receive billions in funding from the Chinese government. It has pushed the Chinese government to restructure the agreement to rely less on debt or to allow other countries to co-finance the operation.
“Pakistan is a poor country that cannot afford huge burden of the loans,” Railways Minister Sheikh Rasheed said Monday in the city of Lahore.
Chinese President Xi Jinping has pushed his Belt and Road Initiative as a means of increasing international trade and goodwill through massive infrastructure spending. Morgan Stanley has estimated the project will cost $1.3 trillion by 2027. Xi has called it the “project of the century,” comparing it to the ancient Silk Road that made China a hub of international commerce.
Pakistan joins a growing chorus of countries concerned about infrastructure deals struck with China under previous administrations.
Thailand, Laos, Sri Lanka and the Maldives have all voiced complaints about the terms of the loans from China, which many have described as debt traps. Malaysia’s new prime minister, Mahathir Mohamad, canceled a $20 billion rail project in August.
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