Pakistan’s infrastructure debate begins with the wrong question. Roads, power systems and water networks may generate social benefits, but most earn rupees, if they earn revenue at all, while foreign loans require dollars. A 2024 G20/GIF/IMF report identifies mismatches between local-currency revenues and hard-currency financing as a central foreign-exchange risk in infrastructure investment. Calling expenditure “development” does not resolve it. At the national level, dollars must come from exports, remittances, investment inflows, reserves or fresh borrowing. Remittances provide vital support, but they are not a substitute for a productive economy. Sustained emigration by skilled and innovative workers may also weaken entrepreneurship, institutional capacity and the development of export industries at home. Converting rupee tolls or taxes into dollars merely transfers scarce foreign exchange from elsewhere in the economy. When inflows fall short, the result is depreciation, import compression, refinancing pressure or default even if the road remains busy.

Claims that infrastructure will stimulate exports must therefore be demonstrated, not assumed. Appraisal should identify the firms that will benefit, the constraint being removed, the additional competitive output and the likely buyers; deduct imported inputs, fuel and profit remittances; compare cheaper alternatives; and establish when net earnings will arrive. A motorway does not produce an export order, while equipment imports and debt service often precede the exports invoked to justify it.

Does Pakistan need another broad construction drive before it can grow? The evidence does not support that proposition. It also does not support declaring the country’s infrastructure complete. Pakistan has a mixed problem: substantial assets that perform below their potential, alongside gaps in access, reliability and resilience. The right question is which specific constraint prevents productive activity, and whether construction is the least-cost way to remove it. Logistics still needs improvement, but its failings cannot be reduced to missing roads. Pakistan’s National Tariff Commission’s shipping and logistics assessment examines trade facilitation as a system. Ports, inland connections, customs procedures, clearance times and logistics services must work together. Faster documentation or better coordination can improve the return on an existing corridor. Building another corridor while leaving the delays intact is an expensive way of avoiding administrative reform.

Electricity provides the clearest warning against confusing additional assets with better service. NEPRA’s FY2024–25 generation review reports average thermal-plant utilisation of 42.5 per cent against reference capacity. Capacity charges represented 61 per cent of the reported power-purchase cost. Low annual utilisation does not prove every megawatt is........

© The Friday Times