EAD Demands Additional Rs. 196 Billion Rupee Cover for Foreign Funded Projects

The Economic Affairs Division has demanded an additional Rs. 196 billion ($664 million) to address rupee cover for efficient utilization of foreign-funded projects. In a written briefing on addressing the rupee cover issue, submitted to the National Assembly Standing Committee on Economic Affairs, the Division stated that the Public Sector Development Program (PSDP) annual review meeting held on September 11, 2024, where the Division shared its additional requirements of Rs. 196 billion ($664 million). While briefing the committee Kazim Niaz, Secretary EAD informed that the government allocated Rs. 350 billion in the current fiscal year for rupee cover of foreign-funded projects. “We require rupee cover for efficient utilization of foreign-funded projects”, said the Secretary, confirming that due to some conditions from the International Monetary Fund (IMF), the rupee cover has been minimized. The committee which met with Muhammad Atif in the chair was given a detailed analysis of the local currency component associated with foreign currency transactions. EAD outlined several factors contributing to delays in project execution. Key procedural challenges were identified, including the lengthy processes involved in the preparation and approval of Project Concept-1 (PC-I) documents, necessary revisions leading to time and cost overruns, delays in establishing designated project accounts, and a general lack of understanding regarding the requirements of development partners. It was suggested that the timely establishment of Project Management Units (PMUs) and the appointment of dedicated project directors could effectively mitigate human resource-related delays. Committee members stressed the importance of incorporating land acquisition, local concerns, and security issues into the project policy frameworks at both provincial and federal levels. The Chairman committee highlighted the necessity of devising a strategic approach for foreign-funded projects to streamline execution and address the underlying factors causing delays. The committee reached a consensus to seek a detailed briefing from the Secretary of Planning on project policies, aiming to formulate recommendations that address the challenges associated with project execution delays. It was emphasized that projects of national significance should not be hindered by routine procedural issues and that reforms are needed to facilitate their timely progress for the best interest of the nation. The EAD reaffirmed its commitment to enhance coordination with both provincial and federal governments, which is crucial for expediting the execution of multilateral and other projects. The committee proposed conducting separate briefings for each multilateral project by inviting the respective executing agencies to discuss project status, existing issues, and make recommendations for accelerating implementation. Currently, the EAD is overseeing 18 multilateral projects with the Asian Development Bank (ADB), 21 with the World Bank (WB), 3 with the Islamic Development Bank (IsDB), 1 with the OPEC Fund, 2 with the Asian Infrastructure Investment Bank (AIIB), and 1 with the International Fund for Agricultural Development (IFAD). These projects span various sectors, including energy, transport, agriculture, public sector management, finance, and health.