ISLAMABAD (Reuters) - Pakistan’s central bank has granted government-run Bank of China a licence to operate in the country to ease the financial requirements of Chinese-led “Belt and Road” projects, the central bank said on Saturday.
China has pledged to invest some $57 billion in Pakistan’s rail, road and energy infrastructure through its vast modern-day “Silk Road” network of trade routes linking Asia with Europe and Africa.
“The Bank of China aims to provide differential and specialised banking services to effectively serve the financing needs of China Pakistan Economic Corridor (CPEC) related projects by leveraging on its experience and global technology platform,” the central bank said in a statement.
The statement outlined the Bank of China’s ambitions to become one of Pakistan’s leading financial institutions by opening branches in major cities across the country.
It said the Bank of China will first bring in $50 million to meet minimum capital requirements.
Officials expect a huge uptick in trade between the two countries once Pakistan’s Arabian Sea port of Gwadar is functional and motorways are finished to allow goods to cross the Himalayas to and from China’s western Xinjiang province.
CPEC has been credited with reviving Pakistan’s sluggish economy although some investors have expressed concerns about the potential impact on Pakistan’s currency once debt repayments begin.
The Interntaional Monetary Fund is forecasting 5 percent economic growth for the year to June 2017 but says this could improve to 6 percent in the medium term with CPEC-related investments.
Reporting by Saad Sayeed; editing by David Clarke