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In a surprising move given Pakistan’s deteriorating fiscal condition and escalating public debt, the government has greenlighted 15 development projects amounting to a staggering Rs515 billion. This approval includes a significant $900 million foreign loan aimed at bolstering climate change efforts. The Central Development Working Party (CDWP), responsible for authorizing development projects, convened a meeting to review 18 proposals, ultimately approving 15.
Approved Projects and Foreign Loan
Of the 15 projects, 12 have been given the nod, with seven forwarded to the Executive Committee of the National Economic Council (ECNEC) for final approval. These projects, costing Rs265 billion, represent a substantial investment in Pakistan’s infrastructure and development. Notably, a $900 million loan proposal from the Asian Development Bank (ADB) was also approved. This loan, intended for climate change mitigation, will be disbursed in two tranches, with Pakistan requesting an increase in the first tranche from $400 million to $500 million.
Concerns and Criticisms
Despite the approval, the finance ministry’s reliance on foreign loans and local dollar purchases highlights Pakistan’s fragile financial situation. The $900 million Climate and Disaster Resilience Enhancement Programme (CDREP) aims to strengthen the country’s capacity to handle climate-related disasters, but it has faced criticism. The Planning Commission has expressed concerns about the high cost of such loans and suggested that Pakistan should seek concessional financing instead.
The Public Sector Development Programme (PSDP), already burdened with financing needs approaching Rs10 trillion, faces additional scrutiny. Recommendations from UK Economist Stefan Dercon include reducing the PSDP size to improve fiscal viability, yet the CDWP continues with its routine project approvals.
Noteworthy Projects and Initiatives
Among the approved projects is an Rs8.6 billion initiative to build 104 additional family suites for Members of Parliament, a decision that has sparked debate given Pakistan’s fiscal constraints. The CDWP also approved the extension of the China-Pakistan Economic Corridor (CPEC) Project Management Unit, a Rs498 million endeavor criticized for its cost and necessity.
The Rs122.2 billion up-scaling of the Green Pakistan Programme, aimed at enhancing natural capital, has faced criticism due to poor execution in its first phase. Additionally, the CDWP cleared several other significant projects, including a Rs10 billion initiative for Danish schools in Balochistan, a Rs1.6 billion Federal Government College of Home Economics in Islamabad, and a Rs29.3 billion Green Line Bus Rapid Transit System (BRTS) project in Karachi.
Conclusion
The government’s approval of these development projects, while ambitious, comes at a time of financial instability. The integration of substantial foreign loans and the continuation of high-cost projects highlight the challenges facing Pakistan’s fiscal management. As the country navigates its economic difficulties, the effectiveness of these projects in contributing to sustainable development remains to be seen.
