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Despite concerns about Pakistan’s growing debt, the interim government has approved a $300 million loan from the Asian Development Bank (ADB) to improve tax compliance. This move has raised questions about whether such objectives could be achieved through efficient tax collection methods rather than borrowing.
The Central Development Working Party (CDWP) cleared four development projects worth Rs126.2 billion during its meeting, chaired by Planning Commission Deputy Chairman Jehanzeb Khan.
The approved projects include:
Thar Coal Rail Connectivity Project: This project aims to connect Thar coal mines and Port Qasim through new rail links, facilitating bulk transportation of coal. The project is designed to provide reliable and efficient railway infrastructure to enable the transportation of Thar coal across the country via an environmentally friendly mode of transportation. Thar coal utilization is expected to reduce import bills, lower fuel costs for electricity production, and benefit the local populace through job creation and royalty generation.
Construction of New Gwadar International Airport: Part of the China-Pakistan Economic Corridor (CPEC), this project has faced delays of over five years. The CDWP agreed to increase the project cost by 161% compared to the 2015 estimate, emphasizing the importance of this airport for regional connectivity.
Improvement of Spera Ragha Road: This project involves the improvement and widening of the existing single-lane road to a two-lane facility, connecting central cities in northern Balochistan to southern Punjab. The current road is in poor condition and hinders mobility for locals and transporters.
Repair of Passenger Coaches and Bogies for Pakistan Railways: This scheme aims to repair 600 passenger coaches and 1,200 bogies for Pakistan Railways at a cost of Rs4 billion.
While these development projects address critical infrastructure needs, the decision to take a $300 million loan to improve tax compliance has raised concerns about Pakistan’s mounting debt. Some argue that tax compliance goals, including reducing the tax gap and payment time, could be achieved through efficient tax collection methods rather than relying on foreign loans.
The approval of these projects reflects the government’s efforts to invest in infrastructure development, regional connectivity, and transportation while managing fiscal challenges. However, the impact of borrowing on the country’s debt burden remains a topic of debate.
