ADB raises lending by a billion dollar to Pakistan
By Attaul Mohsin Syed - Pakistan Times Staff Correspondent

ISLAMABAD: The Asian Development Bank (ADB) has decided to jack up its lending to Pakistan to $3.72 billion for next three years from its earlier pledge of $2.7 billion. The Bank sees 7 per cent GDP achievable for Islamabad during the current fiscal year.

“We have decided to increase our assistance to $3.72 billion for next three years. The global economy may face slowdown due to record oil prices but economic growth will again be accelerated in coming years,” the visiting ADB President, Haruhiko Kuroda, said in a joint press conference with Prime Minister Shaukat Aziz soon after holding talks here at the PM House on Monday evening.

The prime minister said that Pakistan had requested for more funds from the ADB to speed up linkage with Afghanistan and other Central Asian Republics.

“Pakistan is looking for a consortium of all multilateral agencies for constructing mega water dams,” he maintained.

Aziz said the ADB had selected Karachi for improving its infrastructure under mega city projects and the government would initiate rehabilitation of small and medium size cities in all the four provinces of the country.

Energy Cooperation

Answering a query about Indian’s response on energy cooperation with Pakistan, the ADB president said various options were under consideration for energy sector and Pak-India cooperation for gas pipeline from Middle East was one possibility.

Kuroda meets Musharraf

Earlier, Haruhiko Kuroda held talks with President Musharraf and renewed the Bank’s commitment to Pakistan’s development in the years ahead.

Musharraf said on the occasion that Pakistan was focused on socio-economic development of its people and it had been pursuing a series of mega projects to translate recent economic gains into visible improvement in the lives of the people at the grass roots level.

“Having achieved higher economic growth, we are now in the process of realizing basic healthcare and electricity for all Pakistanis by year 2007,” he said.
The ADB president also held talks with Pakistan’s economic team, headed by Advisor to PM on Finance Dr Salman Shah.

The ADB president appreciated the economic achievements of the government and cautioned vigilance against rising inflation and proposed gradual reduction of government subsidies to sustain higher growth rate.

He said that the ADB would increase yearly funding from $1 billion to $1.4 billion in 2006. He asked the ADB team to review the whole process of project development and disbursement to reduce the project cycle time.

Special Secretary Tanvir Ali Agha said that Government of Pakistan had been planning to set up a small group to review and select priority projects for speedy implementation. He asked the ADB team to join this process.

Welcoming the ADB President and members of the delegation Dr Salman Shah gave a brief account of the state of Pakistan’s economy at the time of taking over by President Musharraf and the improved macro-economic indicators of today.

Bold Initiatives

Highlighting various bold initiatives and reforms introduced to improve the financial sector, good governance, eradication of corruption, etc Dr Shah said that when President Musharraf took over the economy was in a bad shape, fiscal deficit was out of control, public debt ratio to GDP was over 100%, the inflation was in double digits, the investors’ confidence was shattered due to inconsistent policies.

He said the government took a number of initiatives for equitable development to sustain a higher growth rate. Khushaal Pakistan Programme, a community development initiative that provides utilities and services to the people at the grass root level has been intensified.

Khushaal Pakistan Fund has been established to provide rural development funding. The prime minister’s concept of ‘one village one product’ has been introduced with the help of ADB. Spending on primary and higher education has been substantially increased.

Highlighting the requirements of infrastructure including roads, highways, logistics, mega city development projects, the adviser asked the ADB to reduce the time period for project development and disbursement of funds for projects.

Detailed presentation on the future requirement of water both for agriculture and drinking, power and roads was given by the ministries concerned. Governor State Bank narrated various financial sector reforms.

Federal Minister for Privatization Dr Hafeez Sheikh informed the ADB team of the transparency in privatization programme and involvement of people through offering shares to the general public. The privatization proceeds are being used to reduce public debt of Pakistan, he said.●