Pakistan fails to utilise $11b foreign aid as floods worsen, says finance minister

Aurangzeb questions whether institutions learned from 2022 floods amid climate change and population growth threats

ISLAMABAD:

Finance Minister Muhammad Aurangzeb said that Pakistan failed to prepare investable projects to utilise $11 billion, pledged by foreign lenders during Geneva conference nearly three years ago. This inability has led to the gap between the government’s need for foreign aid and its ability to spend it effectively.

“Let’s accept that we could not come up with investable projects to benefit from the billions of dollars, pledged in Geneva,” Aurangzeb said while speaking at a conference in Islamabad on Wednesday.

He questioned whether state institutions had learned anything from the devastating 2022 floods and facing two existential threats — climate change and rapidly growing population. The 2022 floods caused damages amounting to $30 billion.

Aurangzeb noted that once again, Pakistan faces ‘billions of dollars in damages’ from the ongoing floods. His remarks came a day after the Economic Affairs Ministry informed the Public Accounts Committee that out of $6.4 billion in project financing pledges, only $2.8 billion was actually disbursed.

Overall, foreign lenders had pledged $11 billion — including $4.6 billion for oil financing and $6.4 billion for rehabilitation and reconstruction — but disbursements remained limited due to the absence of credible projects.

The official data shows, the World Bank pledged $2.2 billion and has so far disbursed $1.6 billion. The Asian Development Bank committed $1.6 billion but has released $513 million only. Likewise, China and the Asian Infrastructure Investment Bank (AIIB) pledged $1.1 billion but extended only $250 million.

The Islamic Development Bank promised to give $600 million but released $231 million. Paris Club countries pledged nearly $800 million but released $139 million. The United States promised to give $100 million and gave $70 million.

Meanwhile, heavy rains in the upper catchments of the Chenab River have swollen downstream flows, prompting the Water Resources Ministry to issue a flood alert for Sutlej, Ravi, and Chenab rivers.

Aurangzeb stressed that unless Pakistan tackles population growth and climate change, it cannot hope to become a $3 trillion economy by 2047, its centenary year.