The government has reduced the rupee allocations proposed for foreign-funded development projects amid fiscal constraints, with the issue coming under discussion at a meeting of the Senate Standing Committee on Planning, Development and Special Initiatives.
A team led by Planning Secretary Dr Tahir Noor briefed the committee on allocations for foreign-funded projects under the Public Sector Development Programme (PSDP) for the fiscal year 2026–27.
The committee was informed that 98 foreign-funded projects, with a combined estimated cost of Rs8.1 trillion, had been included in the current fiscal year’s PSDP. These projects involve foreign assistance amounting to Rs4.65 trillion.
Against a requirement of Rs537 billion in rupee cover, the Economic Affairs Division (EAD), after consultations with the relevant ministries, divisions and donor agencies, proposed an allocation of Rs425 billion.
However, the National Economic Council (NEC), while approving the PSDP at Rs1 trillion against an overall demand of Rs2.9 trillion on June 10, allocated only Rs255 billion for these projects due to fiscal constraints.
The committee, chaired by Senator Quratulain Marri, sought details of projects expected to be completed during the current financial year. The planning team said most of the projects were likely to be completed within the year.
The committee stressed the need for effective monitoring and timely execution, particularly for projects at advanced stages, to ensure that their targets were achieved.
During discussions on reliance on foreign loans, especially dollar-denominated financing that carries interest and repayment obligations, members emphasised the need to prioritise domestic resources and rupee allocations. They observed that foreign borrowing could create additional financial pressures and should be assessed carefully.
The committee also called for more effective utilisation of local resources to reduce unnecessary dependence on external borrowing.
It stressed that foreign-funded projects should receive adequate rupee cover to prevent implementation delays. Members also underscored the importance of transparency, accountability, sound financial management and coordination with donor agencies.
The panel emphasised the need to balance foreign assistance with the country’s domestic fiscal capacity while minimising avoidable financial burdens.
The committee also reviewed progress on the Sukkur-Hyderabad (M-6) Motorway and expressed concern over prolonged delays in the project’s implementation.
Planning Secretary Dr Tahir Noor informed the committee that work on the motorway was expected to begin within months, as foreign financing amounting to $705 million had become available.
The meeting was told that Sections I and II were being processed under the public-private partnership (PPP) model, with the concession award targeted for February 2027.
The Asian Development Bank (ADB) has agreed to provide transaction advisory services for these sections.
The Planning Ministry further informed the committee that financing arrangements with international development partners had been secured for the remaining sections of the motorway.
