Pakistan must enhance infrastructure spending by five times: Maheen Rehman

InfraZamin CEO Maheen Rehman said in a discussion on Tuesday that despite a massive population of 220 million, Pakistan has been spending less than 2% of its GDP on developing its infrastructure when it should be spending around 10%.

She highlighted the need for rigorous development in the areas of education, health and agriculture.

InfraZamin collaborated with Nutshell Group to jointly host the Infrastructure Summit here at a local hotel.

“The purpose of this summit was to highlight the opportunities of debt financing and the exceptional work that Private Infrastructure Development Group and GuarantCo have already done as a model for Pakistan to replicate and benefit from.

“InfraZamin is well positioned with its prowess to illustrate good ideas into the industry of the future,” she added.

The partners of InfraZamin Pakistan include International Finance Corporation (IFC), UK Aid, Infraco Asia, PIDG and GuarantCo.

Climate resilient infrastructure

Meanwhile, GuarantCo CEO Layth Al-Falaki said “development now means climate resilience and Pakistan being a frontline state for the climate crisis needs to inbuilt the SDGs into its vision. Now is the right time to invest in climate resilient projects to rebuild infrastructure in the country.”

Infrastructure Summit to be held in Karachi today

He said that Pakistan had immense potential and the country should not lose hope due to the ongoing crisis in the country.

Jo Moir, Development Director Foreign Commonwealth and Development Office in British High Commission Islamabad, stated “due to Pakistan’s severe climate vulnerability, we believe not only in providing the right infrastructure for climate resilience but also assisting in the transition to decarbonisation.”

She also appreciated the amazing initiatives taken by Federal Minister for Climate Change Sherry Rehman.

State Bank Pakistan (SBP) Governor Jameel Ahmad added the tangent of green economy by elaborating on the sustainable initiatives of SBP and said that “on behalf of the bank, I assure you that we will continue to promote sustainable infrastructure financing and facilitate the financial institutions.”

Talking about the disastrous floods in Pakistan, Ahmad highlighted that the country needed $16 billion to overcome the devastation. Besides post-flood rehabilitation and development, the country also needs economic feasibility for health, food, water, and agriculture.

He further said that the investment opportunities in Pakistan are very limited, whereas the need for investment is much more.

“Measures to promote a climate-resilient economy will be the game changers and many banks have already initiated green banking guidelines,” he said?

Problems with financing infrastructure in Pakistan

Talking about commercial banks, Bank of Punjab President and CEO Zafar Masud said, “there is a serious problem as far as the asset-liability is concerned as only 1.2% of the total deposits are beyond five years.”

“If we forecast a 10-year GDP for Pakistan, the requirement is around Rs5 trillion a year for infrastructure financing, which is not possible through the current funding pot.”

Speaking of the challenges, Pakistan Stock Exchange CEO Farrukh H Khan commented that the basic challenge is the current practice of banks of investing in bonds and holding on to them for long periods of time.“

IFC Principal Country Officer Pakistan Naz Khan said, “the current portfolio of IFC in Pakistan is close to $1.3 billion and we are looking to scale up to almost double in the next 3 years.”

She also spoke of the needed paradigm shift where infrastructure ownership needs to come from private equity.

K-Electric CEO Syed Moonis Abdullah Alvi asserted that privatisation of the power sector in Pakistan is the only solution to get rid of the Rs3 trillion circular debt.

PSX Chairperson Dr Shamshad Akhtar said that Pakistan’s fiscal constraints limited public investment in infrastructure which made it critical for us to attract private financing. She expressed her wish to see an infrastructure bank in Pakistan.

“It is important to recognise that InfraZamin and PIDG have the power to leverage long-term infrastructure financing from both domestic and foreign investors,” she said.

Securities and Exchange Commission of Pakistan Chairman Akif Saeed said “we need to have a dialogue between different stakeholders to have an integrated approach towards infrastructure development and SECP will work hand-in-hand with InfraZamin to achieve this goal for Pakistan.”