(MENAFN- IANS) New Delhi, Dec 1 (IANS) China's lending, under programmes like Belt and Road Initiative (BRI), has created severe repayment pressures in several low‐ and middle‐income countries with large loans for infrastructure, currency mismatches and weak project returns.

Among such countries have been Sri Lanka, Laos, Zambia and the Maldives, with constrained policy space and painful economic adjustments.

Latest reports suggest that Pakistan now faces an $30 billion debt burden to Beijing under the ambitious China-Pakistan Economic Corridor (CPEC) project.

Most of these projects remain incomplete amidst major economic, security, and environmental challenges.

Though Islamabad watched warily as nations buckled under debt traps, it also needed CPEC projects for the development of infrastructure like road and railroad.

Pakistan is currently facing a severe balance‐of‐payments and fiscal squeeze driven by high external debt, low foreign‐exchange reserves and weak growth.

It is pursuing a multi‐pronged bailout strategy with an IMF programme backed by bilateral assurances from China, Saudi Arabia and the UAE, short‐term disbursements, and debt restructuring talks.

Pakistan's economy has been under pressure from large external obligations, a depreciating currency, and elevated inflation that have eroded reserves and fiscal space.

The government availed a new $7 billion IMF Extended Fund Facility with pledges of support from regional partners to take care of financing gaps and implementation.

Pakistan additionally sought, and secured, financial assurances and rollover commitments from China, Saudi Arabia and the UAE, which helped prevent an immediate sovereign default and in persuading the IMF to proceed with its programme.

A large share of Islamabad's external liabilities are bilateral and commercial loans, including significant obligations to Chinese entities tied to CPEC projects.

High debt‐service ratios mean that even modest currency depreciation sharply raises the rupee cost of servicing foreign‐currency debt, squeezing the budget and crowding out development and social spending.

Now, the country is staring at several risk factors, including political instability that could derail reform implementation, slower‐than‐expected growth that undermines revenue targets, and external shocks such as commodity price spikes.

Incidentally, the term debt‐trap diplomacy is used in cases where Beijing deliberately extends excessive credit to vulnerable states, then leverages repayment difficulties to extract strategic concessions such as long leases or asset control.

It reflects the recurring sequence of large loans for flagship projects, cost overruns and weak revenue, foreign‐exchange stress, and restructuring that can include equity stakes, long leases or onerous repayment terms.

In Sri Lanka, Hambantota is one such example where heavy borrowing to build a port with limited commercial prospects left the country unable to service loans, culminating in a 99‐year lease of the facility to a Chinese firm in 2017.

The economic consequence was a loss of sovereign control over a strategic asset and a political backlash that forced policy recalibration and costly restructuring.

In Maldives, rapid borrowings for airports, ports, and resorts coincided with a sharp rise in external liabilities and dwindling reserves where warning bells rang the country's imminent move towards a sovereign‐debt crisis that narrowed fiscal space and forced austerity measures, with China a major creditor among others.

Elsewhere, the China–Laos railway boosted connectivity but also deepened asymmetric dependencies with Vientiane facing large foreign‐currency loans, limited export capacity to service them, soaring inflation and curtailed domestic investment.

Meanwhile, heavy borrowing for infrastructure and resource‐sector deals contributed to Zambia's 2020 default and protracted restructuring talks.

China's state banks have been central creditors in restructuring packages here, and the country's fiscal adjustment has included spending cuts and renegotiated terms that constrain growth prospects.

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