Pakistan Leads South Asia in Infrastructure Investments; Among Top 5 in the World
Pakistan led South Asia region and ranked 4th in the world in infrastructure investment commitments in the first half of 2020, according to World Bank's "Private Participation in Infrastructure" report for the first half on the year 2020. Mexico led the pack with $4,016 million, followed by Brazil 2nd with $3,543 million, China 3rd with $2,859 million, Pakistan 4th with $1,921 million and India 5th with $1,762 million in private infrastructure investment commitments in the first 6 months of 2020. Here is an excerpt of the World Bank report:
"Pakistan had the fourth highest investment commitments—a new entrant to the top five countries this year—with US$1.9 billion of investment commitments, accounting for 0.69 percent of GDP. This can be attributed to the financial closure of the Thar Block-I Coal-Fired Power Plant, which was the only project to reach financial closure in the country during this time period. The Thar power plant and the pipeline in Mexico were the only two megaprojects to reach financial closure in the first half-year of 2020. Lastly, India had the fifth highest investment commitments, at US$1.1 billion, accounting for 0.06 percent of GDP. In the first half-year of 2020, these five countries together attracted US$14.1 billion, representing 64 percent of PPI investments in EMDEs".
|Global Infrastructure Investment by Private Participants. Source World Bank|
The report went on to say that Pakistan's entrance to the top 5 list can be attributed to the financial closure of the Thar Block-I Coal-Fired Power Plant, which was the only project to reach financial closure in the country during this time period. The Thar power plant and the pipeline in Mexico were the only two megaprojects to reach financial closure in the first half-year of 2020. Here's another excerpt of the World Bank report:
"Pakistan became one of the five countries with the most investment in the first half-year of 2020, due to a US$1.9 billion mega coal power project with 1,329-megawatt (MW) capacity. The coal power project was developed under the umbrella of the China-Pakistan Economic Corridor (CPEC). It is part of an effort by the Government of Pakistan to improve energy security and reduce the average cost of power generation by transitioning from oil to coal".
In a 2018 New York Times Op Ed titled "How Not to Engage With Pakistan", ex US Ambassador to Pakistan Richard G. Olson said "Its (CPEC's) magnitude and its transformation of parts of Pakistan dwarf anything the United States has ever undertaken". Olson went on to warn the Trump Administration that "Without Pakistani cooperation, our (US) army in Afghanistan risks becoming a beached whale".
Among the parts of Pakistan being transformed by China Pakistan Economic Corridor (CPEC) are some of the least developed regions in Balochistan and Sindh, specifically Gwadar and Thar Desert.
ANDREW DABALENSHOMIK MEHNDIRATTA|JANUARY 24, 2022
Accessibility describes how easy (or difficult) it is for people to reach services and opportunities. When you look at the data, significant accessibility gaps persist around the world. Globally 51% of individuals living in low-income countries reside within an hour of a city compared to 91% of individuals in high-income countries. This limited access to urban centers hinders rural populations from accessing services and opportunities, including healthcare, education, jobs, and markets. Gender plays an important role as well: as these findings from Pakistan illustrate, women typically must cover greater distances to reach basic services. Even for people living in cities, accessibility may vary depending on the availability of public transport, the impact of traffic congestion.
Lack of access is systematically linked to inferior development outcomes, even more so if motorized transport is not available. The inability to travel to healthcare facilities, for instance, has been associated with increased mortality and morbidity from treatable conditions. Conversely, improved access is often synonymous with improved development outcomes. For example, women with access to roads in Pakistan are twice more likely (14% vs 28%) to go to pre-natal consultations. In rural Morocco, girls’ enrollment in primary schools increased from 17% to 54% when their access to roads improved.
Looking particularly at rural roads investments, the construction of a new road can lead to a chain of positive impacts. When a rural community gets connected to the road network, people who could not reach healthcare, schools, or other essential services before are suddenly able to do so. Workers can access more and better jobs. Farmers can sell their products in more distant markets. But these outcomes can only materialize if rural road projects are carefully planned and prioritized. Also, while investments in road networks are often a critical first step toward enhancing accessibility, they should be integrated into a broader investment package targeting social and technological development overall.
However, transforming this knowledge into action had been hard to operationalize. Lack of data regarding the transport network, opportunities, limited computing power to calculate travel times in large areas and lack of consistent framework had made it hard for us to take this academic research into an operational reality. We needed to understand exactly which transport projects will have the highest impact on accessibility? How would this accessibility transform into household welfare? And how do we create tools to inform planning and investment decisions?
To address these questions, the World Bank’s Transport and Poverty and Equity teams jointly developed a new framework that relies on high-resolution mapping and other sophisticated analytical tools to provide a more granular view of how rural road infrastructure can benefit communities.
We are now able to deploy all that knowledge into operational action, by developing an analytical framework that highlights spatial disparities in access to services and opportunities, calculates the expected gains in accessibility from investments into road infrastructure and thereby informs the placement of transport investments throughout the region.
Targets 5% GDP growth next fiscal year to create new jobs
Finance chief sees this year’s fiscal deficit just above 7%
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WATCH: Pakistan's finance minister says the country plans to boost spending on large infrastructure projects by as much as 40% to create jobs.(Source: Bloomberg)
By Faseeh Mangi and Khalid Qayum
May 6, 2021, 8:37 AM PDTUpdated onMay 6, 2021, 9:46 PM PDT
Pakistan plans to boost spending on large infrastructure projects by as much as 40% to create jobs and foster productivity in an economy crippled by the coronavirus pandemic, Finance Minister Shaukat Tarin said.
The federal government will earmark as much as 900 billion rupees ($6 billion) for development expenditure in the year beginning July, Tarin, who took office last month, said in an interview in Islamabad. The economy needs to expand by 5% next year, he said.
“That’s the bare minimum we need for a country this size,” said Tarin, who is due to present a new budget next month for the world’s fifth most-populous nation. “There are almost 110 million youth.”
Tarin, a former banker, was appointed last month as the fourth finance minister since Prime Minister Imran Khan’s government took power in 2018. He also served in the role between 2008 and 2010, helping the nation avoid default by securing a bailout from the International Monetary Fund. He comes into office as Pakistan faces a third wave of coronavirus cases, prompting authorities to order a week-long shutdown that may weigh on economic activity and hurt incomes.
Tarin’s plan will reverse his predecessor’s decision to lower spending to narrow the budget deficit, which he estimates to be a little above 7% of gross domestic product in the current fiscal year through June, against 8.1% in the previous year. Tarin said he expects the deficit in the next fiscal to be 1 or 1.5 percentage points lower.
While balancing the budget will be key for Pakistan’s current $6 billion loan program with the IMF, the new finance minister is negotiating with the organization for more wriggle room to support economic growth.
The government’s GDP target for next year is a percentage point higher than the IMF’s 4% projection, and Tarin is seeking to boost growth to 6% in the year after. The Washington-based lender sees the economy expanding 1.5% in the current fiscal period after a rare contraction last year.
“We need 2 million jobs every year,” he said. “If we do not go into growth mode, we will have a major crisis on the streets.”
The central bank, which has cut interest rates to a three-year low to support the economy, has been on pause mode for a while and has left some of the heavy lifting to the government.
“First we have to get more revenues,” Tarin said, adding that he’s targeting about 6 trillion rupees next year in tax authority revenue, compared with this year’s 4.75 trillion-rupee target. “Unless we get more revenues, forget about any incentives to boost the economy.”
Other comments from Tarin’s interview:
On talks with the IMF: “All we are saying is that we are just basically going to give them alternate ways of achieving the same objective” including revenue generation and reducing energy debt, adding that the aim is for this to be the last IMF bailout in Pakistan’s history
Plans to tap undrawn allocated funds from Asian Development Bank and World Bank that total $20 billion
Aims to increase tech exports to $8 billion in two years, from an estimated $2 billion this fiscal year, a sector he said that he aims to support
Nation plans to soon launch global sukuk bond