ISLAMABAD: The government said on Monday it had to cut the foreign-funded project portfolio by more than half, from Rs537 billion to Rs255bn, due to a shortage of matching funds in local currency for the current fiscal year.
This was reported to the Senate Standing Committee on Planning, Development and Special Initiatives by a team led by Planning Secretary Dr Tahir Noor.
Mr Noor also informed the committee that work on the Sukkur-Hyderabad (M6) Motorway would begin “within months” as foreign financing totalling $705 million was now available.
The meeting, presided over by Senator Quratulain Marri, reviewed allocations for foreign-funded development projects under PSDP 2026–27.
The panel was informed that 98 foreign-funded projects, with a total estimated cost of Rs8.1 trillion, were included in the current fiscal year’s PSDP, involving foreign assistance of Rs4.65tr.
Against a demand of Rs537bn for rupee cover, the Economic Affairs Division (EAD) had proposed Rs425bn after consultation with the ministries, divisions and donor agencies concerned. However, the National Economic Council (NEC), while approving the PSDP at Rs1tr against an overall demand of Rs2.9tr on June 10, allocated only Rs255bn for these projects due to fiscal constraints.
Senator Marri sought clarification regarding projects expected to be completed during the current financial year. The planning team reported that most of the projects were expected to be completed during the year.
The Senate committee emphasised effective monitoring and timely implementation to achieve projected targets for projects that were now at an advanced stage.
While reviewing the need for reliance on foreign loans, particularly dollar-denominated financing carrying interest and repayment obligations, the panel was of the view that priority should be given to domestic resources and rupee allocations because foreign borrowing had financial implications and needed to be carefully assessed. The government should explore the effective utilisation of local resources to reduce unnecessary dependence on external loans, the panel observed.
The committee was of the view that foreign-funded projects must receive adequate rupee cover to avoid implementation delays, while ensuring transparency, accountability, prudent financial management and coordination with donor agencies.
It emphasised balancing foreign assistance with domestic fiscal capacity and minimising avoidable financial burdens.
Sukkur-Hyderabad Motorway
The meeting reviewed progress on the Sukkur–Hyderabad Motorway project and expressed concern over prolonged delays. The committee was told that Sections I and II were being processed under the public-private partnership (PPP) mode, with the concession award targeted for February next year.
The Asian Development Bank (ADB) has agreed to provide transaction advisory services for these sections.
In addition, financing arrangements with international development partners had been secured for the remaining sections, the planning ministry reported.
Published in Dawn, October 13th, 2026
