Pakistan Misses Out on $11 Billion Flood Aid as Projects Remain Undeveloped

ISLAMABAD: Finance Minister Muhammad Aurangzeb admitted on Wednesday that Pakistan failed to design viable, investment-ready projects to access the $11 billion in flood aid pledged at the Geneva Conference nearly three years ago. This gap, he noted, highlights a persistent weakness in the country’s ability to turn international commitments into practical outcomes.

The minister made these remarks while addressing the ICAP conference on Building a Resilient Public Financial Management Ecosystem, on a day when torrential rains submerged several areas of Punjab. The province is grappling with a flood emergency caused by heavy monsoon downpours and the release of excess water from India.

Failure to Utilise Pledged Funds

Aurangzeb admitted, “Let’s accept that we could not come up with investable projects”, acknowledging that despite global sympathy and promises after the 2022 floods, Pakistan still lags in converting pledges into reality.

The devastating 2022 floods caused an estimated $30 billion in damages, yet only a fraction of the pledged support has reached Pakistan. According to data submitted by the Economic Affairs Ministry:

• Out of $6.4 billion pledged for project financing, only $2.8 billion has been disbursed.

• The World Bank pledged $2.2 billion, but released $1.6 billion.

• The Asian Development Bank (ADB) promised $1.6 billion but disbursed only $513 million.

• China and AIIB pledged $1.1 billion, but released just $250 million.

• The Islamic Development Bank pledged $600 million, releasing $231 million.

• Paris Club nations promised $800 million but released only $139 million.

• The United States pledged $100 million, of which $70 million has been delivered.

Aurangzeb warned that unless Pakistan takes climate change and population growth seriously, the country will fail to realise its goal of becoming a $3 trillion economy by 2047, the 100th anniversary of independence.

Fresh Flood Risks

Meanwhile, heavy rains in the upper catchments of the Chenab River have swelled flows downstream, prompting the Ministry of Water Resources to issue flood alerts for the Sutlej, Ravi, and Chenab rivers. Thousands of people remain at risk of displacement.

ICAP Recommendations for Fiscal Stability

At the conclusion of the event, the Institute of Chartered Accountants of Pakistan (ICAP) presented key recommendations to strengthen public financial management.

• Restructure the NFC Award: ICAP argued that the current formula has created unsustainable fiscal imbalances, with the federal government still spending over Rs1.2 trillion annually on subjects that fall under provincial jurisdiction.

• Pension Reforms: Pension liabilities have ballooned to Rs33 trillion, excluding state-owned enterprises like Railways, PIA, and power companies. The government recently introduced a contributory pension scheme for new hires to curb rising costs.

• Strengthening FBR: ICAP urged reforms to free the Federal Board of Revenue from external influence, pointing out that multiple external advisors, including the IMF, World Bank, and ADB, have failed to deliver meaningful results.

• Tax Exemptions & SOE Losses: ICAP highlighted that annual tax exemptions cost Rs5.8 trillion, while state-owned enterprises have accumulated Rs6 trillion in losses.

ICAP President Saifullah stressed that although the economy has shown some signs of stability, unresolved issues like circular debt, stalled privatisation, and weak fiscal buffers continue to undermine progress.

“Our headline may sound positive, but the foundation remains shaky,” Saifullah remarked, reaffirming ICAP’s commitment to transparency and institutional reform.

Khalid Rahman, Chairman of ICAP’s Public Sector Committee, termed the conference a milestone in advancing Pakistan’s fiscal governance and resilience.