After China stated that it will be fully financing the $8b Karachi-Peshawar Railway Line (ML-1), Pakistan has refused to accept part-financing from the Asian Development Bank (ADB) for the project. The project was originally planned to be partly funded by the ADB.
Minister for Planning and Development Ahsan Iqbal while addressing a news conference on Thursday, stated that China has asserted that dual sourced financing could create problems in the progress of the project. A formal agreement in this regard is due to be signed next month.
As per the original plan, ADB had to provide as many as $3.5b for the 1700 km long line connecting two major ports with the rest of the country to be used for transportation of goods and passengers.
The minister refused to comment about whether the Railway Minister has resisted the Chinese request for fears of monopoly, but clarified that the complete project will be financed by China.
He added that ADB would be now be involved in other projects, such as those under the Central Asian Regional Economic Cooperation programme.
Iqbal stated that the Planning Commission is focusing on maximising allocation of funds for the next year’s development programme since next year would be the final year of the current government. Hence, the government would like to complete the maximum number of projects during this period so as to support the growth momentum.
He said it was also important to have larger development portfolio for the next year because it would trigger activity in the construction industry on which a number of other growth-oriented industries were dependent because of its potential to create jobs.
The Planning Commission has demanded Rs1 trillion for the of next year’s public sector development programme (PSDP). However, the finance ministry has set an upper limit of Rs700bn, he added.
He further added that the finance minister and the prime minister would be requested to increase development allocations. The minister said the annual plan coordination committee is due to meet on May 17 to finalise next year’s development programme. To obtain a formal approval, the Planning Commission has proposed a meeting of the National Economic Council on May 21 or 22, depending on prime minister’s availability.
