Structural reforms to ensure sustainable development in Pakistan

ISLAMABAD: Pakistan needs to introduce drastic structural reforms to develop an economic value proposition that provides incentives to financial markets and private investors to participate in sustainable development through a strategic partnership, WealthPK reports.
It is time for a structural shift towards innovative financing approaches for sustaining and eventually expanding the much-needed targeted investments in Sustainable development Goals, set by the United Nations, to improve the living standard of the people of the country.
Haroon Sharif, Senior Advisor on Financing for Development at UNDP, told WealthPK that Pakistan’s persistent macroeconomic imbalances and somewhat inconsistent policy decisions are to blame for the country’s financial crises. However, he said that the government is striving to revive the Extended Fund Facility of the International Monetary Fund for replenishing the dwindling reserves of the country.
“Traditionally, Pakistan has been financing its Public Sector Development Programme (PSDP) through its budgetary resources that have been financed through revenue collection, which is less than 11% of its Gross Domestic Product, and borrowing from multilateral banks. There has been a cut in the development budget during the past few years for balancing the large fiscal gap between revenues and expenditures,” he said.
Haroon Sharif said that the financial sector of the country is dominated by commercial banks where development financing is subsidised by the state through priority lending schemes managed by the State Bank of Pakistan.
“It is the need of the hour to organise and manage the demand side to demonstrate the potential of impact investments for building climate resilience, technology adoption, connecting markets and expanding outreach of health and educational services,” he said.
He said that UNDP Pakistan is leading that effort and in collaboration with the government. He said that UNDP has set up an SDG Project Development Facility to develop debt and equity financing instruments for selected sectors and schemes. It is meant to reach out to both local financial institutions and international impact investors with a solid value proposition to tap the multi-billion-dollar investment pool, which can support millions of marginalised people.
“Pakistan’s financial market is reasonably liquid, private sector-led and offers possibilities of professionally raising capital for SDG investments. If technical assistance is provided and meaningful partnership is facilitated between the Global Investors for Sustainable Development Alliance (GISD) and leading local financial institutions, there is potential to structure debt and equity funds up to $1 billion to finance sustainable projects in priority areas with a direct impact on SDGs,” said the development expert.
He said that the way forward for Pakistan is to develop an economic value proposition that provides incentives to financial markets and private investors to participate in sustainable development through a strategic partnership and innovative financial instruments, supported by a conducive policy framework.
He said that it is time to work on a strategic partnership among policymakers, the private sector and international development institutions to expand the pool of development financing and reach out to the marginalised segments of society.
“Pakistan can convert the dire need for investments in sustainable development into a great opportunity for the global pool of socially driven impact financiers in partnership with UNDP and leading institutional investors,” Haroon Sharif told WealthPK.