A positive development for Pakistan on the economic front

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A positive development for Pakistan on the economic front

ISLAMABAD: Pakistan has become one of the five countries in the world with the most investment in the first half-year of 2020 for the first time, according to a World Bank (WB) report released Tuesday.

“Pakistan had the fourth-highest investment commitments – a new entrant to the top five countries this year—with $1.9 billion of investment commitments, accounting for 0.69 per cent of the GDP,” the Private Participation in Infrastructure (PPI) 2020 Half Yearly Report said.

The report had termed the current year’s PPI unprecedented because of Covid-19 which brought many sectors, including infrastructure, to a near standstill.

Since the beginning of 2020, existing infrastructure projects were delayed or cancelled due to supply chain disruptions, travel and shipping restrictions, and other obstacles.

Total commitments in the 1HCY20 stood at $21.9 billion across 128 projects in 34 countries, a decline of 56pc from the corresponding period in 2019. The pandemic has significantly decreased financial closures of investment projects across the globe, particularly in the East Asia and Pacific (EAP) region.

According to the report, the Thar power plant in Pakistan and the pipeline in Mexico were the only two megaprojects around the world to reach financial closure in the first half-year of 2020.

The coal power project was developed under the umbrella of the China-Pakistan Economic Corridor (CPEC). It is part of an effort by the government to improve energy security and reduce the average cost of power generation by transitioning from oil to coal.

The report added that the South Asian Region (SAR) region had the second highest 1HCY20 investment level at $4.9 billion, driven by Pakistan $1.9 billion, India $1.8 billion, and Bangladesh $1.2 billion.

In the past few years, China has been an active infrastructure sponsor, speeding up slow progress on major infrastructure projects in South Asia, especially in Pakistan and Bangladesh.

Nevertheless, investment levels saw a 33pc dip from the first half-year of 2019 levels.

In the first half of 2020, the energy sector outpaced the transport sector, attracting $15.1 billion across 73 projects. This accounted for 69pc of global PPI investments.

The transport sector received $4.5 billion across 17 projects, accounting for 20pc of investment commitments in the said period.

The water sector attracted $1.3 billion over 21 projects, and the municipal solid waste sector received $889 million across 17 projects. No information and communication technology (ICT) projects were recorded.

Similarly, renewable energy continued to play a significant role in new energy-generation projects. Of $9.3 billion worth of electricity generation projects. $6.2 billion of investments were in renewables.