On Thursday, Pakistan’s Economic Coordination Committee (ECC), led by Finance Minister Muhammad Aurangzeb, approved significant decisions aimed at bolstering the country’s infrastructure and financial stability. The ECC granted approval to relax bidding rules, allowing a $2 billion contract to be directly awarded to Chinese firms for the construction of a critical section of the Karakoram Highway. Additionally, the ECC approved a substantial Rs78 billion incentive package for banks and exchange companies to boost foreign remittances.
The ECC invoked a special rule to bypass the usual international competitive bidding process, awarding the contract to Chinese companies for the realignment of the Thakot-Raikot section of the Karakoram Highway. This section is crucial for maintaining land connectivity between China and Pakistan, especially under the China-Pakistan Economic Corridor (CPEC) framework.
The decision follows a framework agreement signed between the two nations during Prime Minister Shehbaz Sharif’s visit to Beijing in June. The project will be financed by a $2 billion loan from China, and the selected Chinese companies will oversee engineering, procurement, construction, and supervision of the project. The realignment is necessary as the existing road is at risk of submersion due to the construction of several dams along the route.
These decisions underscore Pakistan’s strategic partnership with China and its commitment to ensuring the success of CPEC projects, while also taking critical steps to manage its foreign exchange reserves through enhanced remittance inflows. The government’s approach reflects a balance between infrastructure development and financial stability as it navigates economic pressures.
