The International Monetary Fund has told Pakistan that it needs to ‘reasses’ its Public Sector Development Programme as it is unaffordable in its current state.
The Fund told the Pakistani government that the cost of current projects is a total of Rs10.7 trillion. However, only Rs727 billion were allocated in the year 2022-23 which means that the projects could take 14 years to complete, even if no new projects are added.
In a report titled “Pakistan: Technical Assistance Report–Public Investment Management Assessment–PIMA and Climate PIMA” the IMF said that such practices can lead to bad decision making by the government.
On top of the current imbalanace, the costs are likely to be undereported since unfunded projects and flood related projects have not been added. The number does not take const increases due to delays either.
The Planning Commission understands that project costs can increase due to inflation, damages and delays in funding that affect builder costs.
A key problem is the absence of medium-term planning which means that authorities cannot clearly lay out how funding will be secured and disbursed.
The IMF has also stated that that development spending has also faced the problem of consistently breaching debt limits over the years.