Punjab budget: $428.54m foreign-funded uplift projects included
LAHORE: Foreign-funded development projects of USD 428.54 million have been included in Punjab budget for FY 2025-26.
These projects focused on improving water supply & sanitation, urban development, environment, irrigation, agriculture, physical infrastructure, health, education, skills development and IT & governance.
As per budget document, foreign engagement in Punjab's development financing primarily takes two forms: project-based loans and grants (Foreign Project Assistance) and programme-based loans (budgetary support). Loans obtained from multilateral donor agencies through the Federal government for specific foreign-assisted development projects are termed as Foreign Project Assistance. Programme loans, on the other hand, provide direct budgetary support, linked with indicators and results, named Disbursement Linked Indicators and Result Based Lending.
The Punjab government, in line with its policy parameters on foreign borrowing, is guided by a preference for concessional financing and longer maturities, ensuring long-term fiscal sustainability.
World Bank-funded projects are: Punjab Clean Air Programme, Getting Results: Action, Delivery of Quality Education Services; Punjab Rural Sustainable Water Supply & Sanitation Project (PRSWSSP); Punjab Resilient and Inclusive Agriculture Transformation Project (PRIAT); Punjab Urban Land Systems Enhancement (PULSE) Project; Punjab Human Capital Investment Project; Punjab Resource Improvement and Digital Effectiveness; Punjab Family Planning Programme (PFPP); Punjab Affordable Housing Programme (PAHP); National Health Support Programme; Punjab Tourism for Economic Growth Project (PTEGP); Punjab Cities Programme and Punjab Green Development Programme (PGDP).
The ADB-funded projects included: Construction of Jalalpur Irrigation Project; Punjab Intermediate Cities Improvement Investment Programme; Project Readiness Financing (PRF) for Punjab Water Resources Management; Project Readiness Financing for Punjab Urban Development Projects; Improving Workforce Readiness in Punjab Project; Developing Resilient Environment and Advancing Municipal Services (DREAMS) in Punjab; Responsive Ready and Resilient STEM Secondary Education in Punjab.
Copyright Business Recorder, 2025
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Business Recorder
5 hours ago
- Business Recorder
Uniform tariff: govt formally moves Nepra
ISLAMABAD: The Federal Government has formally approached the National Electric Power Regulatory Authority (Nepra) to implement a uniform electricity tariff across the country, including Karachi, effective from July 1, 2025. This move incorporates subsidies earmarked for the fiscal year 2025-26. The federal government has reduced subsidy for power sector by 13 per cent to Rs 1.036 trillion for FY 2025-26 from Rs 1.190 trillion for FY 2024-25. In its motion, the Power Division referred to NEPRA's determination of tariffs for distribution companies (Discos), announced on June 23, 2025. Under this determination, the national average tariff has been reduced to Rs 34 per kWh for FY 2025-26, down from Rs 35.50 per kWh in FY 2024-25. Nepra's decisions on KE tariffs: Power Div. flags potential consumers harm, urges revision The Federal Government's motion references the National Electricity Policy 2021, approved by the Council of Common Interests (CCI). Clause 5.6.1 of the policy emphasizes that the financial sustainability of the power sector depends on recovering the full cost of service—where feasible—through an efficient tariff structure that ensures liquidity. Clause 5.6.4 adds that financial self-sustainability should ultimately eliminate the need for government subsidies, except for targeted support to lifeline, industrial, or agricultural consumers. The Power Division further stated that, based on socio-economic objectives, budgetary targets, and NEPRA's consumer-end tariff recommendations for state-owned Discos, the government intends to continue pursuing a uniform tariff structure across all consumers and regions. Accordingly, NEPRA is requested to determine a uniform tariff—including quarterly adjustments—for all state-owned Discos in the interest of consumers. Section 31(4) of the NEPRA Act empowers the Authority to determine a uniform tariff for public sector licensees based on their consolidated accounts, ensuring consumer interest. As per this provision, NEPRA has historically included the impact of targeted subsidies and cross-subsidies in uniform tariffs. The most recent such tariff for Discos was determined on July 13, 2024, and notified on July 14, 2024. After reviewing the tariff schedules recommended by NEPRA on June 23, 2025, for all consumer categories, the Federal Government has decided that a uniform tariff should be applied per Section 31(4) of the NEPRA Act. The proposed uniform tariff reflects the government's economic and social policy, and is based on the consolidated revenue requirements approved for Discos owned and controlled by the Federal Government. This proposal was submitted for Cabinet approval on June 28, 2025, and is being forwarded to NEPRA in anticipation of that approval. The Power Division emphasized that tariff rationalization among Discos is not intended to generate additional federal revenue, but to align with constitutional and policy requirements within the revenue requirements determined for Discos. Once approved, the revised structure will enable NEPRA to determine the final uniform tariff under Section 31(7) of the Act, replacing the existing rates notified on July 14, 2024. The government also aims to maintain a uniform end-user tariff for K-Electric alongside state-owned Discos, even after any future privatization. This will be achieved through direct and indirect subsidies. Consequently, the variable charge applicable to KE will be modified to align with KE's revenue requirements as determined by NEPRA, factoring in proposed targeted and cross-subsidies. This proposal, too, has been submitted for Cabinet approval and is being forwarded to NEPRA in anticipation. In conclusion, the Power Division clarified that this motion has been filed under Sections 7 and 31 of the NEPRA Act, along with Rule 17 of the NEPRA Rules, to seek reconsideration and issuance of a uniform Schedule of Tariffs for Discos, incorporating subsidies and tariff rationalization. A separate motion has also been filed for KE under Sections 7, 31(4), and 31(7), to issue a modified variable charge and maintain national uniformity in consumer-end tariffs. NEPRA is scheduled to hold a public hearing on July 1, 2025 to put a stamp of approval on the Federal Government's motion for uniform tariffs across all regions, including K-Electric's service territory. Copyright Business Recorder, 2025
Express Tribune
7 hours ago
- Express Tribune
The hidden cost of hefty borrowing
While infrastructure projects have brought critical improvements in energy generation, transport connectivity and logistics, they have also saddled Pakistan with an increasing debt burden. photo: file Listen to article Pakistan's recent move to secure a $3.3 billion loan package from Chinese banks has once again placed its economic dependence on Beijing in sharp focus. The deal, which includes a $2 billion syndicated loan and a $1.3 billion refinancing arrangement, is intended to provide much-needed short-term relief to Pakistan's low foreign exchange reserves. In June 2025, following the disbursement of these funds, the reserves rose to nearly $15 billion, offering a temporary cushion equivalent to about two months' worth of imports. However, beneath the surface of this fiscal reprieve lies a complex web of financial vulnerabilities and strategic risks that could undermine Pakistan's long-term economic sovereignty. China has emerged as Pakistan's largest bilateral lender, with outstanding loans exceeding $29 billion. Much of this lending is linked to infrastructure development under the China-Pakistan Economic Corridor (CPEC), a central component of China's Belt and Road Initiative (BRI). While CPEC projects have brought critical improvements in energy generation, transport connectivity, and logistics, they have also saddled Pakistan with an increasing debt burden. Many of these loans are non-concessional, meaning they carry higher interest rates. Additionally, several Chinese-backed energy projects include capacity payment clauses that obligate Pakistan to make fixed payments regardless of power consumption, leading to billions in annual outflows. This contractual structure places sustained pressure on Pakistan's already overextended public finances. The current loan deal underscores a pattern that has developed in recent years: instead of retiring its obligations, Pakistan has increasingly relied on refinancing maturing Chinese debt. While this approach alleviates immediate liquidity crises, it does little to improve long-term sustainability. Refinancing delays the inevitable, creating a revolving door of repayments that expands the debt stock without addressing underlying structural weaknesses. As Pakistan's access to Western credit diminishes due to poor reform implementation and global risk perceptions, Chinese loans appear increasingly attractive because they are disbursed quickly and without stringent conditions. However, this convenience increases China's leverage over Pakistan – not only economically but diplomatically. The growing financial relationship shapes Pakistan's foreign policy calculus, particularly in matters related to India, the United States, and broader regional alignments. Efforts to diversify external financing have yielded some support. The World Bank recently approved a ten-year, $20 billion support package aimed at structural reform and development financing. Additionally, Pakistan remains under the IMF's Extended Fund Facility, which offers periodic tranches of funding subject to conditions such as tax reform, energy subsidy cuts, and improved fiscal management. Yet successive governments have struggled to meet these reform benchmarks, weakening credibility and leading to repeated interruptions in disbursement. In contrast, Chinese funding is politically less sensitive, often directed at visible infrastructure projects and devoid of institutional scrutiny, which makes it more attractive to policymakers under short-term political pressure. Without internal reforms, external financing — no matter how generous or immediate — cannot create sustainable stability. The challenge is not merely about securing foreign funds but about using those funds to build institutional capacity, diversify the economy, and reduce dependency. Continued borrowing without a parallel commitment to reform merely postpones the crisis and locks Pakistan into a cycle of debt and vulnerability. Moreover, the bilateral nature of Chinese lending can undermine Pakistan's position in global credit markets. Multilateral lenders and private investors closely monitor sovereign debt profiles, and overreliance on one creditor can affect Pakistan's risk rating, borrowing costs, and diplomatic flexibility. Questions around repayment capacity, especially in light of high annual debt servicing requirements, may erode investor confidence and reduce future funding opportunities. The latest $3.3 billion package offers short-term relief but does little to change the fundamentals. It is, in essence, a temporary fix that masks a growing problem. Every loan signed without reform commitments increases Pakistan's exposure to future crises. To move beyond this precarious cycle, Pakistan must take control of its economic trajectory. That means implementing broad-based reforms to expand the tax base, restructure public enterprises, improve energy sector efficiency, and enhance transparency in debt contracting. Only then can external financing serve as a tool for growth rather than a source of dependency. Multilateral lenders may impose tough conditions, but their long-term orientation and oversight mechanisms offer a pathway to resilience that bilateral loans alone cannot provide. In the short run, the Chinese loan provides breathing space and may help avoid immediate balance-of-payments crises. But in the long run, the real question is whether this dependence on a single creditor compromises Pakistan's ability to make independent economic choices. For Pakistan to secure a sustainable future, it must shift from firefighting to reform, from short-term relief to long-term resilience. The time to act is now. The writer is a member of PEC and holds a Master's in Engineering
Business Recorder
a day ago
- Business Recorder
Flood project: Pakistan govt seeks $31m financing boost from World Bank
ISLAMABAD: The government of Pakistan has requested the World Bank for increasing the financing envelope by $31 million as well as restructuring of Integrated Flood Resilience and Adaptation Project. The request was made to better align the project with current implementation capacity, performance of the component and operational their readiness, and a stronger focus on resilience. Official sources revealed that the request was based on series of discussions from between senior management of the World Bank, government of Pakistan, and government of Balochistan. The project development objective (PDO) is to improve livelihoods and essential services and enhance flood risk protection in selected communities affected by the 2022 floods. World Bank rates IFRAP implementation as 'moderately unsatisfactory' The proposed additional financing of $31 million and reallocation of US$54 million from other components will support activities under Component 3 of the Parent Project which will increase impact and expand the provision of multi-hazard resilient housing units and livelihoods in Balochistan. The AF will facilitate increasing funding for the housing subsidy grant to 102,000 beneficiaries from the current 35,100. The Additional Financing (AF) aims to scale up housing reconstruction activities in Balochistan Province, covering additional eligible beneficiaries whose homes were affected by the 2022 floods. The affected households were initially identified through the damage assessment conducted by the Government of Balochistan (GoB) and subsequently by the implementing partners of the Project. The AF also includes a Level 2 Restructuring, which reduces the scope of activities under Components 1 and 4 of the Project. It also modifies the Results Framework (RF) to update indicators and targets, including the addition of a relevant World Bank Group Corporate Scorecard FY24–30 indicator. The restructuring does not include any new types of activities, and the Project Development Objective (PDO) remains unchanged. With this AF, the total Project commitment will increase to US$244 million. The need for AF was identified during the implementation of IFRAP. Balochistan was among the provinces most severely affected by the 2022 floods. The Post-Disaster Needs Assessment estimated damage to the housing sector in Balochistan at over $400 million. To address this challenge, the Parent Project was initiated with $75 million equivalent IDA credit for housing reconstruction. However, a significant financing gap remains to fully rehabilitate the damaged housing units in the province. The revised project description is as follows: 12. Component 1 – Community Infrastructure Rehabilitation. This component will finance the rehabilitation of priority community infrastructure damaged by floods, including irrigation and flood protection infrastructure, roads and bridges located in calamity-declared districts of Balochistan. The guiding principle is to build back better with improved infrastructure based on climate risks, improved engineering design standards, and improved construction and maintenance to enhance resilience. The component will also include the technical assistance needed for the design and supervision of the works and for the development of operation and maintenance of the infrastructure. 13. Component 2: Strengthening Hydromet and Climate Services. This component will enhance the PMD capacity to generate and use hydrometeorological information for decision-making, particularly by expanding coverage in the western region, benefiting Balochistan as well as other parts of the country. While financing remains unchanged, cost escalations have reduced the number of Automatic Weather Stations (AWS) from 300 to 110. To ensure sustainability and impact, deployment will prioritize high-risk areas such as flash flood-prone regions in South Punjab and Sindh, aligning with PMD's operational capacity. 14. Component 3: Resilient Housing Reconstruction and Restoration. This component will finance: (i) resilient housing reconstruction grants to beneficiaries for the reconstruction of core housing units damaged by floods; and (ii) institutional strengthening and technical assistance for the reconstruction. It will also support the objective of improved livelihoods generation in the construction sector and allied subsectors. 15. Component 4: Project Management, Technical Assistance, and Institutional Strengthening. This component will support: (i) project management for the FPMU and the provincial PIUs; (ii) technical assistance for M&E, Project Supervision and Implementation Assistance (PSIA), preparation of SoP2, and preparation of community flood resilience plans; and (iii) institutional strengthening through capacity building and drafting a Water Act. 16. Component 5: Contingent Emergency Response. This component facilitates the provision of immediate response to an Eligible Crisis or Emergency, as needed. Following an adverse natural event that causes a major disaster or emergency, the GoP may request the Bank to reallocate project funds to support response and reconstruction. Resources will be allocated to this component as needed during implementation. 17. Results Framework. There are no changes to the PDO. The RF has been updated in line with the revised project design. The indicator 'people with enhanced protection to flood risk' is revised to align with the corporate scorecard indicator 'people with enhanced resilience to climate risks', including its sub-indicators reporting on youth and women. Copyright Business Recorder, 2025
