One of Pakistan’s key railway modernisation project under CPEC subject to IMF approval

Islamabad: One of Pakistan’s key railway modernisation projects planned to be built under the China-Pakistan Economic Corridor (CPEC) is in trouble due to the IMF’s conditions regarding sovereign guarantees, according to a media report on Saturday.

The Main Line-1 (ML-1) aimed to modernise over 1,726 kilometres of colonial-era rail line stretching from Karachi to Peshawar remains subject to IMF approval and the finance ministry’s ability to provide sovereign guarantees for a $6.67 billion loan from China, even though the project’s budget has been cut by 32 per cent, reported the Dawn newspaper.

The CPEC is a collection of infrastructure and other projects under construction throughout Pakistan since 2013.

Pakistan had secured a last-gasp $3 billion bailout from the International Monetary Fund (IMF) on June 30, which later disbursed an initial upfront instalment of about $1.2 billion.

The debt-trapped nation had given the IMF assurances of $8 billion for external payments.

A senior official during a media briefing said the framework agreement for ML-1 had been signed in May 2017 at the estimated cost of $9.8 billion, for which PC-1 (Planning Commission’s initial plan) was approved in August 2020 by the Executive Committee of the National Economic Council (Ecnec).

However, the project passed through ups and downs amid changing priorities and governments in Islamabad.

The project cost has now been revised to $6.67 billion by the two sides, obviously at the cost of reduced scope and quality of the project.

Pakistan and China are expected to make a formal announcement and sign an addendum to the framework agreement during the upcoming visit of caretaker Prime Minister Anwaarul Haq Kakar to Beijing to represent Pakistan at the Belt and Road Initiative (BRI) conference.