Pakistan Unveils Fiscal Risk Monitoring Framework for PPPs

ISLAMABAD: The Ministry of Finance has launched Pakistan’s first-ever Fiscal Risk Monitoring Framework (FRMF) to systematically track and disclose contingent liabilities and financial guarantees arising from Public-Private Partnership (PPP) projects, significantly enhancing transparency and fiscal planning, as reported by Business Recorder. Developed by the Debt Management Office, the FRMF creates a unified methodology for identifying, quantifying, and reporting risks that do not immediately appear in budgets or debt statements but could materialise due to guarantee calls, revenue shortfalls, inflation adjustments, or currency fluctuations. As of December 2025, provisional estimates show Pakistan’s public sector faces Rs472.3 billion in fiscal exposure from PPPs: Rs368.3 billion in contingent liabilities and Rs104 billion in funded guarantees across 36 projects spanning the federal government and all four provinces. These figures will now be regularly disclosed in the Fiscal Risk Statement (FRS) and debt reports. The framework classifies liabilities as direct (fixed contractual obligations such as viability gap funding or annuities) and contingent (condition-based risks), with contingent further split into explicit (contractual) and implicit (politically/economically driven). Each contingent liability receives a qualitative probability rating (Low, Medium, High) supported by written justification based on factors like past calls, demand volatility, and tariff changes. Funded guarantees (letters of credit, payment guarantees) are reported at their maximum nominal value (Rs104 billion), ensuring full visibility. The Federal Risk Management Unit (RMU) will maintain a National PPP Liabilities Tool and Dashboard for project-wise, provincial, and sectoral exposure data. The initiative aims to strengthen fiscal discipline, mitigate surprise shocks, and improve long-term budgetary planning by providing policymakers with a clearer, more credible view of PPP-related financial risks.