Financial Liabilities under CPEC

There are three main kinds of financial liabilities involved in CPEC:

1- Fiscal Liabilities – These include

• all debt servicing liabilities (interest payments and debt repayments) brought on by local investments financed through Chinese commercial or government-to-government loans, and
• returns on equity guaranteed by the Government of Pakistan (GoP).

2- Foreign Exchange Liabilities (other than imports) – These include:

• CPEC related debt liabilities (loans repaid to Chinese donors in USD), and
• repatriation of profits in the case of FDI projects.

3- Contingent Liabilities – These include potential liabilities arising from unforeseeable drops in profit rates of FDI (particularly energy) projects below the amount guaranteed by the GoP (Refer GoP’s sovereign guarantee agreement).