Key Takeaways
- The government has reduced the foreign-funded project portfolio from Rs537 billion to Rs255 billion.
- Work on the Sukkur-Hyderabad Motorway is set to begin within months, with $705 million in foreign financing.
- The Senate committee emphasized the need for effective monitoring and timely implementation of projects.
The government has announced a significant reduction in the foreign-funded project portfolio, cutting it from Rs537 billion to Rs255 billion due to a shortage of matching funds in local currency for the current fiscal year. This decision was reported to the Senate Standing Committee on Planning, Development and Special Initiatives by a team led by Planning Secretary Dr Tahir Noor.
Despite the reduction, the Sukkur-Hyderabad (M6) Motorway project is expected to proceed, with foreign financing of $705 million now available. According to the planning ministry, Sections I and II of the motorway are being processed under the public-private partnership (PPP) mode, with the concession award targeted for February next year.
The Asian Development Bank (ADB) has agreed to provide transaction advisory services for these sections, while financing arrangements with international development partners have been secured for the remaining sections. The project is a key focus of the government’s efforts to improve infrastructure in Pakistan.
The Senate committee, presided over by Senator Quratulain Marri, reviewed allocations for foreign-funded development projects under PSDP 2026–27. The committee was informed that 98 foreign-funded projects, with a total estimated cost of Rs8.1 trillion, were included in the current fiscal year’s PSDP, involving foreign assistance of Rs4.65 trillion.
Against a demand of Rs537 billion for rupee cover, the Economic Affairs Division (EAD) had proposed Rs425 billion after consultation with the ministries, divisions, and donor agencies concerned. However, the National Economic Council (NEC) approved the PSDP at Rs1 trillion against an overall demand of Rs2.9 trillion on June 10, allocating only Rs255 billion for these projects due to fiscal constraints.
Senator Marri sought clarification regarding projects expected to be completed during the current financial year. The planning team reported that most of the projects were expected to be completed during the year. The committee emphasized the need for effective monitoring and timely implementation to achieve projected targets for projects that were now at an advanced stage.
The panel expressed concern over prolonged delays in the Sukkur-Hyderabad Motorway project and the need for reliance on foreign loans, particularly dollar-denominated financing carrying interest and repayment obligations. The committee was of the view that priority should be given to domestic resources and rupee allocations because foreign borrowing had financial implications and needed to be carefully assessed.
The government should explore the effective utilisation of local resources to reduce unnecessary dependence on external loans, the panel observed. The committee emphasised balancing foreign assistance with domestic fiscal capacity and minimising avoidable financial burdens. Foreign-funded projects must receive adequate rupee cover to avoid implementation delays, while ensuring transparency, accountability, prudent financial management, and coordination with donor agencies.
