situation report

Pakistan, China: Spending Cuts Will Affect CPEC Infrastructure Development Projects

1 MIN READJun 18, 2019 | 18:39 GMT

What Happened: Cuts to Pakistan's state spending in the coming fiscal year will reduce government contributions to several infrastructure projects being constructed under the China-Pakistan Economic Corridor, the Nikkei Asian Review reported June 17. Key projects to receive less funding include a highway linking Lahore and Karachi; an airport at Gwadar and a railway connecting Peshawar with Karachi.

Why it Matters: Prime Minister Imran Khan’s fiscal spending on development projects is limited. This means that the longer it takes to complete projects under the CPEC, a flagship program of China's Belt and Road Initiative, the longer it will take for Pakistan’s economy to reap the benefits.

Background: Pakistan's government has implemented a budget for the fiscal year starting in July that features spending cuts in a number of areas as it moves to erase its fiscal and current account deficits with the help of an International Monetary Fund loan. 

Read More:
In the Arabian Sea, Competing Ports in Iran and Pakistan Fuel Ambition and Mistrust (June 10, 2019)
Pakistan: The Political Cost of Islamabad's New IMF Loan (May 13, 2019)
Pakistan Trudges Along a Familiar Economic Path (Sept. 21, 2018)

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