ISLAMABAD: The International Monetary Fund (IMF) has advised Pakistan to reassess its Public Sector Development Programme (PSDP), citing its current unaffordability.
According to the IMF, the total cost of ongoing projects is Rs10.7 trillion, while only Rs727 billion have been allocated for the year 2022-23. This mismatch implies a potential 14-year completion timeline for existing projects, even without introducing new ones.
The IMF, in a report titled “Pakistan: Technical Assistance Report–Public Investment Management Assessment–PIMA and Climate PIMA,” expressed concern that such practices could lead to suboptimal decision-making by the government. The reported costs may also be underestimated, considering the exclusion of unfunded and flood-related projects, as well as not accounting for cost increases due to delays.
The Planning Commission acknowledges the potential for project cost escalation due to factors like inflation, damages, and funding delays affecting builder costs. The lack of medium-term planning is identified as a key issue, hindering the clear delineation of how funding will be secured and disbursed.
Furthermore, the IMF highlighted that development spending has consistently breached debt limits over the years, posing an additional challenge for Pakistan.
