Second phase of CPEC

Prime Minister Imran Khan has directed all relevant ministries to set targets and timelines for the implementation of the second phase of China Pakistan Economic Corridor (CPEC) projects. The second phase involves requests/negotiations with China during the Khan administration for assistance in agriculture and social sector projects while the first phase projects focused on infrastructure projects, particularly energy sector projects, initiated and largely completed during the tenure of the PML-N administration.

Asad Umar as the recently-appointed federal minister for Planning, Development and Reforms, would play the lead role in CPEC project implementation, though timely releases of counterpart funds is no doubt the responsibility of the Finance Ministry. In acknowledgement of the need for cooperation Asad Umar as well as Dr Hafeez Sheikh attended the meeting where they were further directed to provide a detailed briefing on hurdles in the way of CPEC projects' implementation as well as measures taken by relevant ministries to remove the impediments.

During the first quarter, the budgetary operations of federal and provincial governments indicated that just under 9 percent of the total budgeted for the year was actually released under Public Sector Development Programme (PSDP) (from which several CPEC projects are funded); while social sector development disbursements were less than one percent of the 190 billion rupees budgeted for the year though it is unclear whether the latter contains any projects under CPEC with the Ehsaas Kifalat Programme (Benazir Income Support Programme estimated at 120 billion rupees) its largest component. In other words, financial constraints remain as the major hurdle towards CPEC implementation and if disbursements are as per the budgeted targets then some of the financial issues facing some CPEC projects would diminish.

One would also hope that the government has learned valuable lessons from its predecessor; notably, projects must be identified after due process of prioritization. The PML-N government was accused by the PTI as well as sector experts of focusing on generation, rather than on transmission which was unable to evacuate more than 16,000MW of electricity. Thus, while the Prime Minister directed the meeting participants that there is a need to benefit from the Chinese experience in agriculture the relevant sector experts as well as the ministry must identify projects which would make this possible or else there is a danger that sector experts may argue that these projects were not prioritized appropriately.

Be that as it may, the meeting chaired by the Prime Minister surprisingly did not take notice of the coronavirus affecting ever-increasing parts of China though the Chinese government's response as per international agencies has been both swift and appropriate. The country's affected areas are in a lockdown, the streets are deserted and the government has extended the Chinese New Year holidays with the objective of containing the infection, prompting a downward revision of not only China's economic growth rate but also that of the region and of its major trading partners, including the US. In this scenario, to have a meeting on timely completion of CPEC projects sounds like a decision made by the ill-informed and one would sincerely hope that the Prime Minister is informed at least in the next meeting on the ongoing major hurdle in the way of CPEC implementation sourced not to lack of funds in Pakistan but because of the coronavirus challenge.