IMF imposes new restrictions on Pakistan
The International Monetary Fund (IMF) has advised Pakistan to reassess its Public Sector Development Programme, citing its current unaffordability. The Fund communicated to the Pakistani government that the cost of ongoing projects amounts to Rs10.7 trillion.
However, the allocated budget for the year 2022-23 is only Rs727 billion, implying a potential 14-year completion timeline for existing projects, without factoring in new ones.
In a report titled "Pakistan: Technical Assistance Report–Public Investment Management Assessment–PIMA and Climate PIMA," the IMF expressed concern that such practices could lead to suboptimal decision-making by the government.
Additionally, the reported costs may be underestimated, considering that unfunded and flood-related projects are not included, and the calculation does not account for cost increases due to delays.
The Planning Commission acknowledges that project costs can escalate due to factors such as inflation, damages, and funding delays impacting builder expenses. A notable issue highlighted by the IMF is the absence of medium-term planning, preventing authorities from clearly outlining how funding will be secured and disbursed.
Furthermore, the IMF pointed out that development spending has consistently breached debt limits over the years, adding another layer of concern to the existing imbalance in the country's financial planning.