Islamabad, Aug 14: The government of Pakistan approved 15 development projects on Tuesday, totaling Rs515 billion, including a $900 million foreign loan aimed at combating climate change. This stands in stark contrast to the country’s deteriorating fiscal situation and growing public debt.
To review 18 applications, the Central Development Working Party (CDWP), which approves development projects, convened for a full day. They included two concept clearance documents, one position paper, and fifteen development projects for obtaining more foreign funds.
Twelve of the fifteen designs were accepted by the CDWP; the remaining seven were sent to the Executive Committee of the National Economic Council (ECNEC) for ultimate approval. The approved projects cost Rs 265 billion, whereas the foreign loan proposal was for $900 million, or Rs 250 billion.
The concept note for requesting $900 million from the Asian Development Bank (ADB) was given by the Ministry of Finance. The loan will be paid back in two installments, per the plan that the CDWP approved. Although Pakistan has asked for an increase of $500 million, the first payment is currently fixed at $400 million.
Relying primarily on loans from abroad, the government has even started buying dollars on the local market because foreign financial institutions are reluctant to make large loans because of Pakistan’s low credit rating. Although the $400 million loan’s stated goal is to strengthen Pakistan’s ability to fight climate change, it will actually be utilized for budget finance.
According to the finance ministry, the $900 million loan is meant to develop capacity and spark reforms connected to climate change. A contingent credit facility, worth $500 million, will be released in the case of a calamity. The Planning Commission, however, expressed concern that Pakistan ought to ask for concessional budget assistance rather than incurring costly loans for disaster relief.
Pakistan’s ability to withstand floods and other climate-related disasters is to be improved through the $900 million Climate and Disaster Resilience Enhancement Programme (CDREP), which is supported by the Asian Development Bank. The loan will help create a framework for disaster risk reduction, increase risk-layered disaster financing, and assist institutional capacity building for strategic planning, readiness, and response.
The Public Sector Development Programme (PSDP) in Pakistan is already overly expansive, requiring over Rs10 trillion in funding for projects that have been approved. Nevertheless, the Planning Commission continued to review and approve new developments.
In his “Home Grown Economic Plan of Pakistan,” UK Economist Stefan Dercon suggested that in order to maintain Pakistan’s fiscal sustainability, the PSDP’s size as well as future financing requirements be decreased. On the other hand, the CDWP agenda presented initiatives that ordinarily belonged to several ministries’ regular responsibilities, reflecting a business-as-usual mentality.
In addition, the government suggested spending Rs8.6 billion to build 104 more family suites for parliamentarians and their staff. This project was approved by the CDWP despite reservations about Pakistan’s ability to pay its bills. The CDWP suggested splitting the project into two phases, with the first phase, estimated to cost Rs4.1 billion, to be finished by June 2025, according to the planning ministry.
The China-Pakistan Economic Corridor (CPEC) project management unit scheme was suggested to be extended for an additional three years by the Board of Investment. The project was developed for five years, however it has not yet reached its goals. The amended plan to build the CPEC Project Management Unit at a cost of Rs498 million was approved by the CDWP.
The goal of this half-billion-rupee project is to keep the CPEC Secretariat’s current staff. The implementation of the Framework Agreement on Industrial Cooperation is the new objective, and it should be the primary duty of the Board of Investment as it does not need for increased employment. The Planning Commission objected to the retention of 38 workers for a duty that shouldn’t require a separate project, at a cost of Rs716 million over three years. According to the Planning Commission, the Board of Investment spent up to 666% more than the authorized budget during the first phase.
The Green Pakistan Programme, which aims to enhance natural capital through forest restoration, biodiversity conservation, and the promotion of carbon financing, was another significant initiative that was taken into consideration. It was scaled up to Rs122.2 billion. According to the working paper, the initiative aims to plant 3.3 billion trees, with a 50% sustainability rate, adding 1.96 billion trees to the current forest cover.
Nonetheless, the subpar project execution in its initial phase has drawn the critical attention of Pakistan’s Auditor General. The Planning Commission suggested that approval of the second phase be withheld until the auditor’s complaints were addressed. The objections brought to light various difficulties, including insufficient monitoring of forestry and wildlife operations and deficiencies in tree plantation management.
A Rs. 10 billion proposal to open Danish schools in Balochistan was also approved by the CDWP. These science and technology schools will be built during a three-year period, even though the constitution states that education is a subject for the provinces. Because of constitutional issues, the Planning Commission opposed the project’s approval. However, the Secretary of Education told the forum that the National Economic Council has approved projects of this kind in undeveloped areas, as long as the province government pays half of the project’s cost. The government of Balochistan has consented to split the funding.
The Federal Government College of Home Economics in Islamabad, a Rs1.6 billion project, and the Green Line Bus Rapid Transit System (BRTS) in Karachi, a Rs29.3 billion project, were both approved by the CDWP. An additional project,
