ISLAMABAD: Pakistan is among the most vulnerable countries to climate change, which has been causing it a loss of $2 billion every year since 2000.
According to a report by the International Monetary Fund (IMF) on public investment in Pakistan, 4 million people are affected by climate change every year. It said that the 2022 flash floods in Pakistan impacted thirty million people and killed 1,700 people in the country.
The report also said that five people are killed every year due to natural calamities and climate change. The report expressed fears that by the year 2050, Pakistan’s economy may be affected by natural disasters by up to 9 percent.
The IMF has also raised concerns about the affordability of Pakistan’s Public Sector Development Programme (PSDP), stressing a reassessment of the initiative. The total cost to complete projects in the PSDP is reported to be 10.7 trillion rupees, more than 14 times the allocated budget of 727 billion rupees for 2022-23.
The Fund emphasized that the current annual PSDP budget and the addition of new projects would take approximately fourteen years to complete existing approved projects.
IMF, in its latest report, titled ‘Pakistan: Technical Assistance Report–Public Investment Management Assessment–PIMA and Climate PIMA’, said that notwithstanding intentions to prioritize the completion of current projects, new projects with a total cost of 2.3 trillion rupees were added by government in the last budget.
In addition, the separate preparation and oversight of the current budget and the development budget by the Finance Division and the Planning Commission, respectively, can result in inconsistent and sub-optimal decision-making.
IMF Urges Reforms
It underlined the need for reforms to establish a more credible basis for the PSDP budget as the current projects continue to be added at a significant rate.
The Planning Commission’s funding priority for the current projects was also noted by the IMF, stressing the necessity for a realistic and sustainable approach.
Moreover, the estimated years to completion may be understated, considering factors such as unfunded projects, unaccounted flood-related projects, and delays leading to cost overruns. It suggested a comparison of project costs with the realistic funding available in the medium term for better planning.
READ ALSO: Death Toll in Gaza War Surpasses 12,300
The report also pointed out the ineffectiveness of deficit ceilings and debt in containing expenditure, with consistent breaches over the years. Public debt has consistently exceeded the 60% ceiling since 2012. The lack of a medium-term planning document and the absence of projects in Vision 2025 were underlined as challenges in influencing budget decisions effectively.
The IMF recommended reviving 5-year planning in Pakistan, considering the limited fiscal space and the need for growth drivers. A medium-term plan could address gaps in public investment management as well as incorporate changes in the national and international landscape since Vision 2025. The report stressed the importance of climate-resilient infrastructure, given Pakistan’s exposure to climate risks.
While acknowledging some improvements in public investment management through reforms, it noted the incomplete implementation of steps outlined in the Public Financial Management Act 2019 and the 2021 Manual for Development Projects.
The report called for strengthening institutions for public investment management to improve the delivery of critical infrastructure services in Pakistan.
