ISLAMABAD: The Central Development Working Party (CDWP) on Friday cleared a total of eight development projects worth Rs266.55 billion despite serious reservations over 193 per cent cost escalation in Karachi’s Yellow Bus Transit and non-compliance with prior government guideline in Rawalpindi’s cardiac centre.

The meeting of the CDWP, presided over by Planning Minister Ahsan Iqbal, itself approved four projects involving a total cost of Rs10.55bn and recommended four larger projects to the Executive Committee of the National Economic Council (Ecnec) for approval.

The meeting recommended to Ecnec for approval “Karachi Urban Mobility Project (Yellow BRT Corridor)” with an estimated cost of Rs178.593bn despite about 193pc increase in its cost in five years from Rs61bn in 2019. The meeting was told that the project cost increased by 46pc in dollar terms and 193pc in rupee terms as approved by Ecnec.

The “Expansion of Armed Forces Institute of Cardiology and National Institute of Heart Diseases (AFIC-NIHD), Rawalpindi” was referred to Ecnec for formal approval at an estimated cost of Rs12.95bn.

Ecnec to decide Karachi’s Yellow Bus Transit despite 193pc cost surge

The meeting also referred the revised “Prime Minister’s Pakistan Fund for Education” worth Rs14bn to Ecnec for approval.

The CDWP also considered revised ADB-funded “Upgradation/Extension of NTDC’s Telecommunications & SCADA System” worth Rs50.4bn and recommended to Ecnec for approval.

The CDWP approved the “Construction of Graduate Block in Natioal College of Arts Lahore” worth Rs1.607bn to enable country’s premier art education institution to expand its programs.

The meeting also approved Rs4.3bn “Punjab Family Planning Programme” and underscored the critical need for provinces to exercise devolved responsibilities fully. Mr Iqbal expressed concern over Pakistan’s lagging social indicators, citing the country’s status as one of the only two nations worldwide still affected by polio was an embarrassment and a nation with population growth rate of 2.55pc could not progress.

In the Water Resources sector, the forum approved the “Project Readiness Financing (PRF) for Punjab Water Resources Management (PWRM)” at a cost of Rs1.673bn. The meeting also approved another project namely “Hosting Community Support Programme” worth Rs2.988bn for solarising schools and healthcare facilities in Gilgit-Baltistan besides essential education infrastructure.

Published in Dawn, December 13th, 2025

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KARACHI: Despite mounting pressure from industry for immediate relief, a rate cut in the upcoming monetary policy appears unlikely, as the International Monetary Fund (IMF) has advised maintaining tight liquidity to curb expected inflation.

Industrial leaders have called for a reduction in interest rates to help them stay competitive globally, but the government appears satisfied with low economic growth, shrinking exports, rising imports and worsening poverty.

Several manufacturers have already begun shifting operations to Egypt, Mexico, Dubai and Vietnam. Some analysts say pressure is building for at least a 100 basis point cut when the policy is announced on Monday, though most believe the IMF’s stance will prevail.

The last reduction in the policy rate came in May. Since then, the benchmark rate has held at 11 per cent, even as headline inflation dipped to three per cent earlier this year. November inflation was recorded at 6.1pc, compared to 6.2pc in October.

The IMF, which released a $1.2 billion tranche on Thursday, praised the State Bank for maintaining positive real interest rates on a forward-looking basis and said the monetary stance must remain tight and data-driven.

Industrialists demand reduction to stay competitive globally

For the past three years, high interest rates have weighed on growth — first due to record 38pc inflation and now despite inflation falling sharply. Economic expansion has averaged below 2pc, while the central bank has remained focused on “sustainable growth”.

“With inflation under control, PKR holding steady, and reserves outperforming targets, it is imperative for SBP to pivot,” Interloop Limited CEO Musadaq Zulqarnain said in a post on X.

Interloop recently installed a textile unit in Egypt. He said Pakistan’s growth engine had stalled and the industry was under severe stress. “A timely reduction in rates will catalyse business activity — and materially ease the government’s fiscal burden. The moment calls for decisive monetary support,” he added.

However, senior banker Rashid M. Alam said inflation is unlikely to decline any further. If the monetary stance is guided strictly by inflation, then the State Bank should keep the rate as it is at 11pc, he said.

He added that the market remains uncertain, and any rate-cutting cycle amid high inflation, political uncertainty, border tensions, elevated petroleum prices and a widening current account deficit could trigger instability. Considering all these things, the case is to stay neutral, he said.

A former caretaker federal commerce minister, who is also an industrialist, posted on X that Pakistan’s interest rates are nearly twice those of regional economies, including China and India.

“Over the last 36 months, we have attempted to stabilise the economy but achieved less than 2 per cent aggregate growth,” he said, urging the government to reduce interest rates to around 6pc and bring real interest rates down to 1pc.

Published in Dawn, December 13th, 2025

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The State Bank of Pakistan (SBO) is expected to retain interest rates at 11 per cent on Monday, a Reuters poll showed, as analysts push back rate-cut forecasts to late 2026 after the International Monetary Fund warned inflation risks persist and policy must stay “appropriately tight”.

All 12 analysts surveyed expect no cut in the policy meeting scheduled for Monday.

A majority of them see inflation hovering at 6pc–8pc in the coming months before rising again towards the end of fiscal 2026 as base effects fade and food and transport prices stay volatile after flood-related supply disruptions.

Most respondents now believe the SBP will not begin easing until the closing months of FY26, which ends in June 2026, with some analysts pushing forecasts for the first cut into fiscal year 2027, beginning July 2026.

IMF warns against premature easing

The IMF, in a second review released on Thursday, said monetary policy needs to remain “appropriately tight and data-dependent” to keep expectations anchored and noted that the SBP had maintained positive real interest rates on a forward-looking basis.

It said the tight stance had been pivotal in reducing inflation and should be maintained to ensure price stability and support the rebuilding of external buffers.

Analysts said these risks, along with the SBP’s preference for maintaining positive real interest rates, would keep policymakers cautious.

The SBP has held its policy rate at 11pc since September, after cutting it by 1,100 basis points between June 2024 and May 2025 as inflation fell sharply from highs near 40pc in 2023.

Price, external pressures edge up

Inflation has started to accelerate after months of decline, driven by food and transport costs and fading base effects.

Headline inflation eased to 6.1pc in November from 6.2pc in October but remained above the SBP’s 5–7pc target. The IMF expects inflation to temporarily accelerate to 8–10pc this fiscal year before stabilising.

While Pakistan’s macroeconomic backdrop has stabilised somewhat, analysts said the recovery remains sensitive to external pressures.

Premature rate cuts could pressure the rupee even with anticipated IMF inflows, including a $1.2 billion disbursement this week to bolster reserves and support climate-resilience reforms.

Any demand-driven uptick, said Sana Tawfik, head of research at Arif Habib Ltd, “will have an adverse impact on the external front”.

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