DAVOS: Pakistan sees little reason to fear debts arising from its massive infrastructure projects with China, the country's prime minister said in an interview on the sidelines of the annual meeting of the World Economic Forum .

Prime Minister Shahid Khaqan Abbasi noted that when it comes to the ambitious China-Pakistan Economic Corridor project, an independent body will shoulder the loans in most cases, meaning the national debt would not necessarily increase.

"I don't think it is a correct perception," Abbasi said of the debt concern, speaking with the Nikkei Asian Review in Davos on Thursday. He stressed that the corridor project has two core concepts - financial sustainability and environmental conservation. "All projects are basically done on these two principles," he said.

Infrastructure development in the corridor coupled with enhanced public security would help raise international trust in Pakistan, giving foreign companies - not just Chinese ones - the confidence to invest, the prime minister said.

Abbasi also said he expects economic benefits from more efficient power generation and lower-cost transportation, thanks to road improvements. The development of Gwadar Port will also extend benefits to neighbouring countries in Central Asia, he said.

China has positioned the corridor as a flagship project of its Belt and Road Initiative. The plan is to build roads, railways and energy infrastructure across Pakistan, linking Kashgar in China's western Xinjiang region with the Arabian Sea port of Gwadar.

The Chinese side is covering most of the estimated $62 billion cost. Beijing could conceivably use this to pressure Pakistan, especially if the country struggles to repay its debts.

Sri Lanka, which saw its own debts to China swell, in December granted Chinese companies a 99-year lease on the port of Hambantota by converting debt to equity. Some worry Pakistan will fall into a similar "debt trap."

The administration of US President Donald Trump has decided to halt military assistance to Pakistan, accusing the government of being uncooperative in rooting out terrorists. Abbasi sees things differently.

"Our position is clear," he said. "We are partners in the war against terror. The result of the war against terror is evident. There are no safe havens for terrorists anymore."

On Pakistan's real economic growth for fiscal 2017, which runs through June, Abbasi predicted the rate will be higher than in fiscal 2016, when the economy expanded by 5.3 per cent - the quickest pace in 10 years.

"Exports have increased significantly for the last six months," Abbasi said. "Despite devaluation and an increase in oil prices, inflation remains controllable. We should be able to get close to six per cent."

'CPEC to provide dividends for centuries'

Abbasi said the CPEC project would provide dividends for centuries to come in the shape of employment generation, industrial growth and connectivity.

The prime minister said consolidation of democracy in Pakistan was a positive indicator and stressed all institutions should work hand in hand for development and stability of Pakistan, said a press release issued in Islamabad.

He said Pakistan was privileged to be part of the visionary Chinese leadership’s Belt and Road Initiative.

Abbasi said the PML-N government, on assuming power, faced major challenges of law and order, terrorism, energy shortage and an under-performing economy. He said due to the hard work and commitment of the government, law and order had improved considerably and restored investors’ confidence.

“I met several business leaders here in Davos and all of them expressed a strong desire to invest and expand businesses in Pakistan,” the prime minister said.

Elaborating the success achieved in eliminating terrorism, he said Pakistan has fought the war against terrorism from its own resources with a heavy toll on human lives and substantial loss to the economy.

Pakistan had been hosting around three million Afghan refugees since long which was the longest and largest refuge provided anywhere around the globe. The world must acknowledge Pakistan's efforts and sacrifices, he said.

Regarding the progress made on energy front, he said Pakistan had surplus gas and overcome energy deficiency in a sustainable and efficient way. "We have diversified our energy mix and with inclusion of coal and gas instead of expensive conventional fuels," the prime minister said.

Pakistan had achieved high economic growth with low inflation and it was a positive scenario augmenting greater investor confidence, he said and added Pakistan had completed 1,700 kilometres of six-lane motorways under the CPEC, a target which many developed countries found hard to achieve.

He said Gwadar Port was operational and provided world class shipment and logistical facilities.