Islamabad, November 22, 2023 (PAKONOMY): In the face of challenges in project implementation and growing demands for transparency from international lenders, the caretaker government of Pakistan is actively seeking additional financial support. Caretaker Finance Minister Dr. Shamshad Akhtar has urged multilateral and bilateral lenders to provide assistance, particularly in the form of ‘debt for nature and debt for social development swaps,’ to help the country meet its climate finance targets.
This appeal comes as Pakistan prepares for the upcoming UN Climate Change Conference (COP-28) scheduled from Nov 30 to Dec 12 in Dubai. Dr. Akhtar engaged with key representatives from major multilateral and bilateral lenders during back-to-back meetings, highlighting the need for international financial backing.
To bolster its financial position, the government has adjusted its budget plans, including the postponement of the conventional Eurobond launch due to adverse global financial market conditions. Dr. Akhtar announced plans to pursue climate financing, leveraging instruments such as Environmental, Social, and Governance (ESG) bonds. The success of these endeavors is contingent upon the improvement of Pakistan’s credit rating, anticipated after the disbursement of the $700 million second tranche of the $3 billion IMF program.
In preparation for COP-28, the finance minister emphasized the importance of optimizing the capital of Multilateral Development Banks (MDBs) and expanding lending headroom. This strategic move aligns with the government’s commitment to meeting climate finance targets.
Acknowledging the significant challenges in project preparation and implementation, especially concerning the disbursement of committed funds, the government faces hurdles in various project financing pipelines, including flood rehabilitation schemes. Both the IMF and the World Bank have emphasized the need for transparency and accountability in foreign-funded projects, including those under special-purpose vehicles like the China-Pakistan Economic Corridor (CPEC) and the Special Investment Facilitation Council (SIFC).
Representatives from major international organizations, including the World Bank, European Union, Asian Development Bank (ADB), Islamic Development Bank, USAID, UNDP, Germany, Japan, WFP, IFAD, and others, have pledged continued support. They highlighted the importance of transparency, alignment with government priorities, and timely disbursement of committed support. The success of the IMF review was also acknowledged.
Project delays, with over half of $6.7 billion World Bank-funded projects found problematic, and a similar situation with ADB-funded projects, raised concerns during the meetings. Dr. Akhtar expressed her worries, emphasizing the urgency of addressing critically delayed projects. She pledged to bring these issues to the attention of the Prime Minister’s Office and provincial governments, seeking their support in expediting project completion.
Dr. Akhtar appealed to donors for expertise and technical assistance to ensure timely project implementation, benefiting Pakistan’s socioeconomic development. The review of the federal project portfolio funded by ADB and the World Bank emphasized the critical role these projects play in socio-economic development, offering access to job markets and fostering economic mobility to uplift people out of poverty.
The finance minister underscored the importance of a portfolio review to address implementation bottlenecks and meet disbursement targets for the current fiscal year. Detailed discussions covered both successful and problematic projects, including infrastructure restoration post the 2022 floods, border crossing point improvements, digital payments accessibility, housing finance, tax base broadening, adaptive social protection, and higher education sector enhancement.