'Gamechanger' CPEC bills for Pakistan starting to come due.

[sandeep]

 

https://tribune.com.pk/story/2320020/talks-begin-to-roll-over-3b-cpec-debt?amp=1&__twitter_impression=true

 

 

Quote

Against inflows of $19 billion, the outflows from CPEC power projects are estimated at over $31 billion on account of both dividend and debt repayments over a period of 20 years, as per documents of the planning and development ministry from December 2018.

Commercial loans for setting up power plants had been arranged at an interest rate of London Interbank Offered Rate (Libor) plus 4.5%. However, it is the return on equity, which in some cases is as high as 34.2%, that will cause an outflow of $11.3 billion.

 

Normally, when loans are given for development projects by one country to another, especially where the work is going to be done by companies from the lending country, the loan terms are super generous in terms of interest rate and payment timeframes.  But here its the opposite.  

 

4.5% on top of Libor itself is a massive rip-off.  For comparison, the Japanese gave a 'loan' for India building railway corridor, at interest rate of 0.01% - as close to zero interest as you can get, and on top of that, its a 40 year maturity with a 10 year grace period.  At that point, inflation and currency depreciation would reduce the value of the amount by what, half?  Essentially its a massively discounted loan.  Now obviously Pakistan is not India, but the point is that any time 'development' loans are part of a country to country relationship, the interest rates are nominal and discounted.  Not massively jacked up to this extent.  

 

The sheer amount of rip-off - with sovereign guarantees to pay back in USD!!! - is shameless.  34% guaranteed RoE.  That's just.......

 

And you have Pakistani patriots bragging about how wonderful the relationship with Iron Brother China is.

 

China is perfectly happy to have unstable poor states at its periphery - see North Korea for example.  Both NoKo and Pakistan are kleptocratic dictatorships who have WMD because of Chinese 'assistance', and are massively dependent on Chinese military and economic 'assistance'.  Its a model that works fine for the CCP. 

 

Question is, how bad is the shortage of semi-literate citizens in Pakistan, that they can't understand these basics?  How can they just allow themselves to be exploited and looted like this by their military overlords?  

 

 

 

 

 

 

[diga]

12 minutes ago, sandeep said:

Question is, how bad is the shortage of semi-literate citizens in Pakistan, that they can't understand these basics?  How can they just allow themselves to be exploited and looted like this by their military overlords?  

Maybe the literate folks in Bakiland are either corrupt or in a world where they think making these short term sacrifices for their country will strengthen them in the long term 

[QuarantineTormentino]

16 minutes ago, sandeep said:

4.5% on top of Libor itself is a massive rip-off. 

Absolutely. LIBOR has lost its relevance in recent years due to its susceptibility to manipulation among other factors and is being gradually phased out. SOFR/SONIA will replace it soon.

[sandeep]

1 minute ago, diga said:

Maybe the literate folks in Bakiland are either corrupt or i

too busy figuring out how to escape from pureland - the less literate aim for Arabic jannat, the slightly more educated aim for UK/Canada/US etc.  

 

The trends are obvious.  Pak State is going the NoKo way - it will take a couple of decades, but its firmly on the path.  Anybody in Pakistan with half-decent qualifications, does not want to stay there.  Its only the fools and wannabe corruption beneficiaries, who do.  

 

Just like CCP 'protects' the North Korean dictatorship to prevent Korean unification and have a stronger Korea on its borders, they will continue to triage the Pakistani 'state' so that it can continue to stay hostile to India, and keep it busy.  

 

PakMil corrupt jernails don't care, they are busy milking the 'awaam' and state so that their kids can go abroad and run "Papa Johns Pizza".  

 

Problem for us is that this basket-case is on our borders, and is going to keep harassing India with 'sub-conventional' attacks.   Requiring major investment and resources allocated to security instead of development.  

 

 

[maniac]

58 minutes ago, diga said:

Maybe the literate folks in Bakiland are either corrupt or in a world where they think making these short term sacrifices for their country will strengthen them in the long term 

They are not stupid, the generals are very shrewd and cunning and they know how to fill their pockets and scoot out of the country when **** hits the fan.

 

Funnily enough most of these generails have the so called “baniya” mentality that they use as a slur against Hindus. I mean the head of army owns papa John’s franchises lol. Where do you think he gets the money from.

[Lone Wolf]

Wondering if China even needs CPEC anymore..  They will virtually ease past Afghanistan now & already have amazing & secretly defence relations with Iran.  Central Asian market is already there for the taking including Africa thanks to Chabahar. 

 

Belt & Road projects are in full swing in Kazakhstan & Turkmenistan I guess. 

CPEC looks like lw*a ka game changer. 

[coffee_rules]

Isn't paying Interest haram in Sharia?

[sandeep]

3 hours ago, Lone Wolf said:

Wondering if China even needs CPEC anymore..  They will virtually ease past Afghanistan now & already have amazing & secretly defence relations with Iran.  Central Asian market is already there for the taking including Africa thanks to Chabahar. 

 

Belt & Road projects are in full swing in Kazakhstan & Turkmenistan I guess. 

CPEC looks like lw*a ka game changer. 

CPEC is just a cheap payoff to pakistan from straying from the hate india path.   BRI is all about entrenching currently existing advantages that Chinese manufacturing has, for the foreseeable future.  Manufacturing is something that somebody can compete on, but if the Chinese create a worldwide robust distribution logistics network that they control, that is a price advantage that is almost impossible to compete against.  Think about how Amazon is so hard to compete against for other wannabes, even strong competitors like Walmart are struggling. Because they own the best and most cost-effective infrastructure - warehouses, logistics, and the cloud.  That's what OBOR is about - to solidify and install Chinese superiority in manufacturing for generations to come.  That's why CCP is subsidizing Huawei and their 5G installations wherever they can, all over the world.  Thats what the 'digital silkroad' is all about.  Chinese and CCP primacy of international trade and networks. 

 

It is a big bet, but one by no means is any position of success - thus  far. 

 

Its a shame that India is not even on the player board yet, let alone be in a position to do something about this great game.

[dial_100]

1 hour ago, sandeep said:

CPEC is just a cheap payoff to pakistan from straying from the hate india path.   BRI is all about entrenching currently existing advantages that Chinese manufacturing has, for the foreseeable future.  Manufacturing is something that somebody can compete on, but if the Chinese create a worldwide robust distribution logistics network that they control, that is a price advantage that is almost impossible to compete against.  Think about how Amazon is so hard to compete against for other wannabes, even strong competitors like Walmart are struggling. Because they own the best and most cost-effective infrastructure - warehouses, logistics, and the cloud.  That's what OBOR is about - to solidify and install Chinese superiority in manufacturing for generations to come.  That's why CCP is subsidizing Huawei and their 5G installations wherever they can, all over the world.  Thats what the 'digital silkroad' is all about.  Chinese and CCP primacy of international trade and networks. 

 

It is a big bet, but one by no means is any position of success - thus  far. 

 

Its a shame that India is not even on the player board yet, let alone be in a position to do something about this great game.

 

I think you expect that India could even be a player in itself is a great compliment for India. We are a democracy that even allows and protects snakes to thrive. We shouldnt expect us anywhere close to China. Unless we act as 1 nation for the whole world, the progress of that magnitude is just a dream. 

[sandeep]

4 hours ago, dial_100 said:

 

I think you expect that India could even be a player in itself is a great compliment for India. We are a democracy that even allows and protects snakes to thrive. We shouldnt expect us anywhere close to China. Unless we act as 1 nation for the whole world, the progress of that magnitude is just a dream. 

you are selling short the advantages that India has, and has had for decades.  Simply because we keep wasting and frittering them away.  Lets see how the great post-pandemic "supply chain reset" plays out, and whether India is able to get itself out of the self-dug khaddaa its been in for so long.

[Mariyam]

12 hours ago, coffee_rules said:

Isn't paying Interest haram in Sharia?

That's the wrong question.

The real question should be:

Is taking a loan with interest permissible?

From my understanding, it is not.

 

[Real McCoy]

14 hours ago, maniac said:

They are not stupid, the generals are very shrewd and cunning and they know how to fill their pockets and scoot out of the country when **** hits the fan.

 

Funnily enough most of these generails have the so called “baniya” mentality that they use as a slur against Hindus. I mean the head of army owns papa John’s franchises lol. Where do you think he gets the money from.

You took the words out of my mouth. They always point to baniya mentality in endia but look who's being a baniya that's looting them like the english. maybe we have to tie the generails with yahoodi and amriki saazish to make a point.

[ravishingravi]

16 hours ago, sandeep said:

 

https://tribune.com.pk/story/2320020/talks-begin-to-roll-over-3b-cpec-debt?amp=1&__twitter_impression=true

 

 

 

Normally, when loans are given for development projects by one country to another, especially where the work is going to be done by companies from the lending country, the loan terms are super generous in terms of interest rate and payment timeframes.  But here its the opposite.  

 

4.5% on top of Libor itself is a massive rip-off.  For comparison, the Japanese gave a 'loan' for India building railway corridor, at interest rate of 0.01% - as close to zero interest as you can get, and on top of that, its a 40 year maturity with a 10 year grace period.  At that point, inflation and currency depreciation would reduce the value of the amount by what, half?  Essentially its a massively discounted loan.  Now obviously Pakistan is not India, but the point is that any time 'development' loans are part of a country to country relationship, the interest rates are nominal and discounted.  Not massively jacked up to this extent.  

 

The sheer amount of rip-off - with sovereign guarantees to pay back in USD!!! - is shameless.  34% guaranteed RoE.  That's just.......

 

And you have Pakistani patriots bragging about how wonderful the relationship with Iron Brother China is.

 

China is perfectly happy to have unstable poor states at its periphery - see North Korea for example.  Both NoKo and Pakistan are kleptocratic dictatorships who have WMD because of Chinese 'assistance', and are massively dependent on Chinese military and economic 'assistance'.  Its a model that works fine for the CCP. 

 

Question is, how bad is the shortage of semi-literate citizens in Pakistan, that they can't understand these basics?  How can they just allow themselves to be exploited and looted like this by their military overlords?  

 

 

 

 

 

 

 

I would say, its not a rip off but a fair risk evaluation based on country, currency and risk. For India, interest rates are low because its linked to JPY interest rates which are almost 0% for 10 year bonds even at times. Add to that, the high risk proposition that a country like Pakistan represents. For our lenders in Japan, they know what they are investing in and Japanese are perhaps the most risk averse of the lot. Lastly, one must consider the cost of hedging FX also. 

 

But yes, Pakistan is a failed state with great strategic inheritance. They are going to be completely colonized by Chinese. Its just a matter of time. 

[sandeep]

7 hours ago, Mariyam said:

That's the wrong question.

The real question should be:

Is taking a loan with interest permissible?

From my understanding, it is not.

 

Everything is halal if it can somehow be used to continue dushmani with Endia.

[sandeep]

6 hours ago, ravishingravi said:

I would say, its not a rip off but a fair risk evaluation based on country, currency and risk.

 

Its a massive rip-off - development 'aid' and projects such as these, where chinese companies get 100% of the contracts, are almost universally bundled with subsidized 'soft' loans.  They are called 'soft' loans because the terms are sweetened to a large extent, as an incentive to justify the contracts going all to companies from the loaner country.  This is just standard operating procedure for most country to country loans.  "Credit risk" cannot be used to justify charging exorbitant high-end commercial loan rates.  Credit risk evaluation would come into play for private entities who would have concerns about repayment and lack the heft that nation-states do. 

 

This is straight-up corruption, plain and simple.  The Pakistani representatives sold out their citizenry for a few pennies.  It is as black and white as it gets.  Even basket-case African countries do not have to take on loans at Libor + 5% etc for construction projects - from partner countries that is.  Of course corrupt 'national leaders' have gotten into such bad deals for decades.  There is nothing novel about it.  The only thing notable about this predictable corruption saga, is the supposed claim that the Chinese are 'helping' Pakistan.  When in fact they are looting them. Systematically.  

[coffee_rules]

8 hours ago, Mariyam said:

That's the wrong question.

The real question should be:

Is taking a loan with interest permissible?

From my understanding, it is not.

 

“Islamic banking refers to a system of banking that complies with Islamic law also known as Shariah law. The underlying principles that govern Islamic banking are mutual risk and profit sharing between parties, the assurance of fairness for all and that transactions are based on an underlying business activity or asset.

These principles are supported by Islamic banking's core values whereby activities that cultivate entrepreneurship, trade and commerce and bring societal development or benefit is encouraged. Activities that involve interest (riba), gambling (maisir) and speculative trading (gharar) are prohibited.”

 

See the bolded part

[Mariyam]

^^ and??

[coffee_rules]

1 minute ago, Mariyam said:

^^ and??

You said it is not prohibited. Pakistan has taken loans and paying Interest with their hearts and kidneys

[Mariyam]

25 minutes ago, coffee_rules said:

You said it is not prohibited. Pakistan has taken loans and paying Interest with their hearts and kidneys

Said it is not permissible!

[coffee_rules]

6 minutes ago, Mariyam said:

Said it is not permissible!

 

oops! Had my senior moment