Underspending climate funds

Pakistan’s chronic problem of underspending allocated development and climate funds is undermining its economic growth and disaster resilience. Despite access to significant international aid, the country struggles with low absorption capacity, bureaucratic delays, and inefficient financial systems. Major lenders like the World Bank, ADB, EU, and others have repeatedly flagged Pakistan’s slow project execution and disbursement failures, leading to rollovers and backlogs. Instead of addressing structural flaws, Pakistan has frequently diverted these unutilised funds towards emergency responses during disasters like floods and Covid-19, establishing a cycle that discourages systematic reforms.

This practice of repurposing funds not only weakens long-term development but also erodes donor confidence and jeopardises future funding prospects. Pakistan’s growing ‘throw-forward’ burden of incomplete projects, politically motivated ventures, and maladaptive infrastructure reflect deep systemic weaknesses. Unless Pakistan reforms its project management and fund utilisation processes, it risks further economic stagnation, increased debt, and a diminished ability to secure crucial climate financing in an increasingly competitive global environment.

Overview:

The article criticises Pakistan’s persistent underspending of development and climate funds. It highlights the consequences of delayed projects, misuse of funds for emergencies, growing debt from unfinished initiatives, and lost credibility with international donors. The core argument is that unless Pakistan reforms its fund management systems and project execution strategies, it will struggle to achieve sustainable development or climate resilience.

NOTES:

Pakistan’s underspending of development and climate aid severely affects national progress. International organisations like the World Bank, ADB, and GCF have repeatedly noted Pakistan’s poor project implementation capacity, resulting in disbursement delays and fund rollovers. The dangerous cycle of repurposing development funds for emergencies without addressing the root causes fosters inefficiency and increases vulnerability to disasters. The backlog of incomplete projects (‘throw-forward’) is piling up, risking long-term debt traps. Addressing bureaucratic bottlenecks, reforming project planning, and enhancing fund absorption capacity are essential for Pakistan’s sustainable growth and competitiveness for future climate financing.

Relevant CSS Syllabus Topics:

• Pakistan Affairs: Economic Development, Disaster Management
• International Relations: Climate Diplomacy, International Aid Management
• Environmental Science: Climate Change Adaptation, Climate Finance

Notes for Beginners:

Pakistan receives money from different international organisations to help with development and climate projects. However, the country is not able to use this money properly because of delays and poor planning. Many times, instead of fixing the problems, the government moves this unused money towards dealing with emergencies like floods or Covid-19. This short-term solution causes bigger problems later, like unfinished projects and losing trust from those who give aid. Pakistan must change the way it handles these funds to complete important projects, avoid more debt, and protect itself better against future disasters.

Facts and Figures:

• $2 billion underspent annually in Pakistan.
• Roll-over of foreign assistance funds rose from $1.2bn (2017-18) to $2.1bn (2022-23).
• World Bank’s Pakistan portfolio disbursement rates 15-20% below targets.
• 55% of projects needing extensions (2020-23).
• $850m (World Bank) and $500m (ADB) redirected during 2022 floods.
• Backlog of 909 incomplete projects worth Rs10.32 trillion by early 2024.

To wrap up, The article paints a grim picture of Pakistan’s structural inefficiencies in fund management. The continuation of underspending, fund repurposing, and bureaucratic inertia threatens both its development goals and disaster preparedness. Urgent reforms are needed to enhance transparency, accountability, and capacity in project execution to rebuild donor trust and secure sustainable growth in an increasingly competitive world.