The Economic Co-ordination Committee (ECC) of the Cabinet has turned down a proposal of the Planning Commission to extend grant of $15 million to Afghanistan to adjust escalation charges under 'Prime Minister's Programme for Reconstruction and Rehabilitation of Afghanistan, saying that Pakistan can ill afford foreign currency grants, at present.
While considering the summary submitted by the Planning Commission in the meeting held on October 6, 2009, the ECC was apprised that Pakistan had pledged an amount of $300 million as grant for 'Prime Minister's Programme for Reconstruction and Rehabilitation of Afghanistan'.
The ECC was informed that a committee, headed by Additional Secretary, External Finance, Finance Division, had recommended that Planning Development Division should move a summary for ECC's approval to adjust escalation charges of 5 percent ($15 million) as an interim arrangement to complete the projects under 'Prime Minister's Programme for Reconstruction and Rehabilitation of Afghanistan'.
The ECC expressed serious concerns over it, and opposed the proposal, keeping in view concerns over the performance of key macro-economic indicators in Pakistan. Sources said that some members of the ECC strongly criticised the Planning Commission for requesting that charges be waived at a time when the government of Pakistan may again be forced to knock on the door of International Monetary Fund (IMF) to bail out the economy if its efforts to convince 'Friends of Democratic Pakistan' (FoDP) to disburse its pledges failed.
No criticism was tendered in the Cabinet against the Prime Minister for announcing a grant of 300 million dollars to the war torn neighbouring country at a time when Pakistan could ill afford this investment.
The ECC was informed about difficulties being faced in completing a number of projects within the contractual cost because of change in the value of rupee. "A committee had been constituted under Additional Secretary, External Finance, Finance Division, to review the contracts of government-funded projects being carried out in Afghanistan following devaluation of Pakistan currency after award of work to contractors," Planning Commission authorities told ECC.
It was noted that the Joint Economic Commission (JEC) had recommended projects selected for implementation under the $300 million grant and also approved by government of Pakistan committee for Reconstruction and Rehabilitation of Afghanistan (CRRA) headed by Planning Commission Deputy Chairman.
It was elaborated that 29 projects were at different stages of completion. Work on six projects was yet to start. However, the remaining projects were dropped on the request of Afghan government. The ECC deferred the summary submitted by Planning and Development Division on 'Variation of cost of Development projects in Afghanistan-Initiated by Pakistan', with the direction that sponsoring body may revisit the proposal and resubmit it to ECC, if fully justified.