By Staff Reporter
ISLAMABAD: The government has drastically curtailed funding for new development projects, limiting allocations to just 2 percent of the Public Sector Development Programme (PSDP) for the current fiscal year, a move driven by stringent conditions tied to the International Monetary Fund’s Extended Fund Facility (EFF), officials disclosed during a Senate committee briefing on Friday.
Planning and Development Secretary Awais Manzur Sumra outlined the government’s efforts to comply with IMF demands for fiscal discipline at a session of the Senate Standing Committee on Planning and Development, chaired by Senator Quratulain Marri.
Sumra told the committee that the IMF had recommended capping new development projects at 10 percent of the PSDP to address Pakistan’s large portfolio of ongoing projects. However, citing severe resource constraints, the government opted for an even tighter limit, allocating only 2 percent of PSDP funds to new initiatives in the 2025-26 budget. “If we impose a 10 percent cap on development projects, it will not be viable for us,” Sumra told the panel, emphasizing that the 2 percent cap was a pragmatic response to the country’s fiscal challenges.
He noted that the decision reflects a strategic focus on completing existing projects of national importance, with 2,518 projects worth Rs344 billion either completed or closed as part of a broader review of the 2024-25 PSDP. This effort reduced the program’s financial overhang by approximately Rs2.16 trillion, Sumra said.
The committee’s discussion underscored the IMF’s growing influence over Pakistan’s development priorities. Sumra revealed that the IMF had submitted a detailed questionnaire in March 2025, probing areas such as Public-Private Partnerships (PPPs) and Public Investment Management (PIM), both overseen by the Planning Commission.
Pakistan submitted its responses on March 20, addressing concerns raised in the IMF’s Diagnostic Report, which highlighted persistent issues including weak project prioritization, frequent delays, cost overruns, and inadequate safeguards for allocated funds.
Senator Marri, the committee chair, expressed frustration with these shortcomings, reiterating the panel’s long-standing recommendation to prioritize the completion of ongoing projects before launching new ones. “We cannot keep starting new projects while existing ones languish,” she said, pressing for stricter adherence to timelines and budgets.
The briefing also spotlighted two major infrastructure projects under the National Highway Authority (NHA): the Sukkur-Hyderabad-Karachi Motorway (M-6) and the Karachi-Quetta-Chaman Road (N-25). The M-6, a critical artery connecting key cities in Sindh province, is divided into five sections, with the Noushehroferoz-Ranipur and Ranipur-Sukkur segments prioritized for the first phase.
NHA officials told the committee that board approvals for these sections are expected in September 2025, with funding secured from the Islamic Development Bank for two segments. Negotiations with the Saudi Development Fund and the OPEC Fund for International Development are ongoing, with a Saudi delegation slated to visit Pakistan in October. Separately, the Karachi-Hyderabad Motorway (M-10), a proposed 168-kilometer, six-lane highway, carries a preliminary cost estimate of Rs254 billion .
Final cost projections and commercial feasibility studies are still pending, but the project is expected to be included in next year’s PSDP.
Marri voiced sharp concerns over the NHA’s handling of the M-6 project, noting that four months had already been lost without progress. She criticized the authority’s request for an additional four-month extension to finalize decisions under the PPP model, warning that further delays would not be tolerated.
“Work on this project must begin by October 2025,” she directed, threatening to escalate the matter to the Senate’s upper house if the deadline is missed. She also called for the Economic Affairs Division and other relevant departments to brief the committee at its next meeting on measures to ensure timely implementation.
Sumra briefed the committee on efforts to modernize the PSDP process, including the adoption of the Intelligent Project Automation System (iPAS). The platform aims to integrate systems, enhance budget accuracy, and automate fund releases, addressing some of the inefficiencies flagged by the IMF.
Additionally, the government is facilitating re-allocations and technical supplementary grants to prioritize near-completion and foreign-funded projects, as authorized by the National Economic Council.
The committee also reviewed the status of its prior recommendations, with Sumra noting that of the 22 proposals made by the panel, some had been implemented while others remained under review. When pressed for a detailed compliance report on projects recommended by senators, the Planning Ministry requested more time, prompting Marri to summon relevant ministries to the next meeting for a full accounting.
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