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Pakistan Approves Over Rs700 Billion in Development Projects,Raising Fiscal Concerns
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Islamabad,Pakistan – May 15,2024 – The Pakistani government has approved a sweeping package of development projects totaling over Rs700 billion (approximately $2.5 billion USD), sparking debate over the nation’s fiscal health and adherence to International Monetary Fund (IMF) conditions. The approvals, granted in a recent series of meetings chaired by the Prime Minister Shehbaz sharif and relevant ministers, encompass infrastructure, energy, environmental initiatives, education, and tourism across multiple provinces.
Infrastructure Development takes Center stage
A meaningful portion of the approved funding is allocated to road infrastructure.The Rato Dero-Moro Road project in Sindh,a crucial link for agricultural transport,will receive Rs37 billion in joint funding from the federal and Sindh governments. Further south,the Sindh Coastal Highway project has been revised to Rs37.7 billion, with the federal government contributing Rs27 billion and Sindh providing Rs10.8 billion through its Annual Development Program.The dualization of the Mehran Highway, spanning 135km from Nawabshah to Ranipur, is budgeted at Rs41 billion.
Balochistan is slated to receive substantial investment in road networks. A 332km stretch from Khuzdar to Kuchlak will cost Rs99 billion, with Rs34 billion allocated for the current fiscal year. The Karoro Wadh and Khuzdar-Chaman sections (104km) have been approved for Rs133 billion, with Rs33 billion earmarked for the current year. Rehabilitation of the Jhaljao-bela Road is approved for Rs16.2 billion, while the Balochistan Water Security and Productivity Improvement Project will receive Rs10 billion.
Punjab also benefits from major road projects, including a dualisation project from Sargodha to Mianwali via Khushab at Rs12 billion, and a road from Gujranwala to the M-2 Interchange via Hafizabad at Rs13.2 billion. Though, both projects raise concerns as the federal government is contributing 25% and 28.2% respectively, potentially breaching IMF stipulations regarding provincial fiscal autonomy under the National Fiscal Pact.
Urban infrastructure is also a priority. Lahore’s sewerage system, extending from Larechs Colony to Gulshan-e-Ravi, is approved at Rs49.3 billion. A controlled access corridor between Niazi and Babu Sabu Interchanges will be fully funded by Punjab at a cost of Rs12 billion.
Energy and Water Management
The 16MW Naltar Hydropower Project has been approved at Rs10.6 billion, aiming to bolster energy security in Gilgit-Baltistan. A Rs17 billion flood management project is planned for Balochistan’s Kachhi Plains,addressing recurring flood risks in the region. The reconstruction of the National highway N-5 under the Resilient Recovery and Reconstruction Framework is approved at Rs165 billion ($588 million), with the Asian Infrastructure Investment Bank (AIIB) providing $500 million (85% of the total cost).
The government has also allocated funds to education and tourism. The Prime Minister’s Pakistan Fund for education received Rs14 billion, while Punjab Chief Minister Maryam Nawaz’s Laptop Programme received Rs27 billion. Punjab’s Tourism for Economic Growth project is cleared at Rs12.2 billion, and the Higher Education Development programme is approved for Rs21.2 billion.
Environmental Initiatives
The Green Pakistan Programme has been upscaled to Rs122.2 billion, focusing on forest restoration, biodiversity conservation, and the development of non-timber forest markets. Punjab is set to receive Rs32 billion and Khyber-Pakhtunkhwa (K-P) Rs28 billion from this program.
Revenue Enhancement and Ongoing projects
A revised Rs41 billion project under the Pakistan Raises Revenue Programme, funded by a $400 million World Bank loan from 2019, aims to boost revenue collection and expand the tax base, but remains incomplete after six years. The project’s slow progress raises questions about implementation challenges and bureaucratic hurdles.
Fiscal Concerns and IMF Implications
Several projects,
