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Pak: Financial woes a big hurdle in the way of big infra projects
The people of Pakistan hope that the newly elected Prime Minister Nawaz Sharif will roll out high-profile infrastructure projects in the country, but the crippling financial situation of the country is seen as a big hurdle.

Nawaz Sharif-led Pakistan Muslim League had rolled out many big ticket projects over the last five years in the country's richest and the most populous province, and in this way has earned huge popularity. The Pakistanis are hoping the same from Sharif in the entire country.

Among many infra and social welfare projects, the first ever metro bus system in Lahore, free laptops and solar energy panels for students and a network of high quality schools in poor rural areas of Punjab province are the key ones. In the pre-election campaign, Sharif had promised similar developments in the whole nation.

The poor infrastructural development in the Pakistan like the poor situation of the electricity supply shifted the support base from the Pakistan's People Party to Pakistan Muslim League-Nawaz.

The metro bus service in Lahore has made the lives of travelers very easy. People have hailed services of the 27-station network of buses running on dedicated lanes and elevated roadways, run by a Turkish company and carrying 120,000 passengers a day. It was built at a cost of Rs30 billion ($300 million).

“The normal buses used to make long halts the stoppages. However, this new bus service stops only for two minutes at each halt,” said a commuter to AFP.

Nawaz Sharif led PML-N has promised that similar bus services will be started in Karachi, the largest city and economic hub of Pakistan, and the capital Islamabad.

Giving his first speech after being elected for the third term, Sharif was strong on talk of investment in infrastructure, particularly a road and rail network to link northern neighbour China to the southwestern port of Gwadar, recently taken over by Beijing.

However, the ground reality is that launch of populist projects do not come cheap and Pakistan is in a dire financial predicament, with a fiscal deficit in 2012 of 8.5 percent of GDP and growth in 2013 forecast at 3.5 percent -- half what economists say is needed to absorb the growing young population into the workforce.

More pressingly, foreign exchange reserves are dwindling, to just $6.6 billion in late May, or less than two months' export cover, down from $11.3 billion a year earlier. Pakistan has to also repay a loan of $4 billion USD to IMF by the end of 2014. This would further put pressure on the currency reserves and many observers expect Pakistan to ask for another loan.

On one side when Sharif is promising to launch big projects, analysts are expressing fear that the PML-N's projects could create extra burdens.

“These are good projects but at the same time the government should also be in the business of mobilising resources. If resources are not mobilised and yet we go for financing all these kinds of projects nationally, it will lead to a larger budget deficit and accumulation of more debt,” Ashfaque Hassan Khan, principal of the National University of Science and Technology Business School told AFP.

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