| Project Detail |
Project Name
Promoting Sustainable Public-Private Partnerships Program (Subprogram 1)
Project Number
55183-001
Country / Economy
Pakistan
Project Status
Approved
Project Type / Modality of Assistance
Loan
The proposed program supports the Government of Pakistans efforts to promote sustainable, broad-based, and inclusive economic growth. The core objective of the program is to strengthen the governance framework and enabling environment for publicprivate partnerships (PPPs) at the federal government level by strengthening the (i) policy, legal, and institutional frameworks for public investment management and public financial management in connection with PPPs; and (ii) national and sectoral infrastructure planning and PPP project preparation. The program is designed as a policy-based loan with a programmatic approach and two subprograms. Subprogram 1 aims to improve the policies, laws, and institutional capacity that provide the foundation for creating an enabling environment for PPPs. Subprogram 2 will build on these foundational actions to operationalize the PPP framework and, ultimately, prepare a sustainable pipeline of well-structured and fiscally prudent PPP projects. The program was requested by the Government of Pakistan as a policy-based lending modality to be disbursed over two subprograms. The PBL will facilitate the design and implementation of reforms that are necessary to create an enabling environment for PPPs. The programmatic approach will serve to chronologically sequence the reforms in a multiyear framework (2022-2024) and bring flexibility to incorporate changes as warranted by the countrys economic situation.
Project Rationale and Linkage to Country/Regional Strategy
Persistent structural challenges that impede overall economic progress include (i) a narrow production and export base that makes the economy less resilient to economic shocks and results in a binding balance-of-payment constraint on growth, (ii) energy sector issues including circular debt, transmission losses, and inefficiencies that impact the sectors financial viability and reliability; (iii) large and recurrent fiscal deficits, and (iii) eroded macroeconomic buffers that reflect structural weaknesses in economic management. Limited fiscal space leads to chronic underinvestment in vital sectors such as infrastructure and social services, hindering population resilience. Increasing population growth and rapid urbanization have put significant pressure on Pakistans public infrastructure stock and on the governments ability to increase its public investments in key sectors of the economy, such as roads, water and sanitation, energy, railways, and aviation. Pakistans exposure to climate change and disasters triggered by natural hazards underscores the need for significant investment in climate-resilient infrastructure assets that are resilient to climate risks like floods, cyclones, and heat waves.
Mobilizing private finance through PPPs offers a viable solution to bridge the financing gap in public sector infrastructure projects. By leveraging the efficiency and expertise of the private sector, PPPs have the potential to deliver projects that are both time- and cost-efficient, generating value for money. However, a key challenge lies in the governments ability to create an environment that is conducive to strategic (rather than ad hoc) PPP implementation, ensures alignment with various strategic objectives, and maximizes value for money. |
