20000211

ADB to lend $490m this year

IKRAMUL HAQ

ISLAMABAD: The Asian Development Bank (ADB) is expected to lend $490 million to Pakistan during calendar year 2000 following discussions of a visiting ADB country programme mission with the government.

Addressing a press conference at the ADB premises, the visiting mission said that $290 million would be provided by the ADF, soft window, while $200 mill from OCR (Ordinary Capital Resource).

ADB Resident Chief Rinus Zijsvelt said that the country's programme was to be finalised by November last year, but because of the political developments the discussions were delayed by two months.

However, he added that the mission headed by Marshuk Ali Shah, Chief of Country Programme Division, concluded the discussions while wrap-up meetings were held on Wednesday and Thursday.

Bruce Carrad, Senior Programme Officer, said that while framing the programme the new orientation of ADB for poverty reduction has been kept in view. Under it, future lending would involve 40 percent assistance for poverty reduction. The country programme agreed to with the government of Pakistan is also based on this principle.

He added that the Second NWFP assistance Area Development Project ($40 million) Punjab Water Resources Sector Development Progamme ($150 million), NWFP Urban Sector Developent Project (470 million), Non-formal Education for Rural Women ($30 million) and even Foreign Currency Import Finance facility ($150 million) have their focus on improvement the living of the poor and underprivileged.

The 2000 programme includes 15 technical assistance for a total of $12.9 million.

He expected that loans for two on-going projects would be released on fast track. First is the second tranche of $125 million for the Capital Market Development Loan and the other is an incentive tranche for the Trade, Export Promotion and Industries Loan. The latter is expected to be released by June this year while on the other discussions are continuing on the structural reforms in the insurance sector.

He said that Power Sector Restructuring Programme of $255 million is pending since last year and is standby project. Whenever the various terms of the MoU signed with the government are implemented, the fund would be sent to the board of governors for release.

But Rinus Zijsvelt stated that the progress has been very slow and he doubted it could be approved during this year.

The essential condition is the privatisation of KESC, which is not likely in the coming months.

The ADB chief said that an energy sector mission visited Pakistan last week and it discussed ADB's future involvement in the energy sector and also looked at the opportunities in gas sector in cooperation with the public and private sector. It was an exploratory mission whose assistance would

go beyond year 2000.

Responding to a question about incidence of poverty in Pakistan, Carrad and other member of the mission Min Tang, Senior Economist, said that the bank has not done its own studies, but is now preparing data with the government agencies and others. He agreed that it is increased in recent years.

It is not only in Pakistan but other countries too and ADB's deep concern was reflected in its strategy prepared last year. Its assistance is now more focussed on poverty alleviation and it was decided that 40 percent of the bank's assistance would go for such programmes.

Asked if new programmes were tabooed because of the G-7 sanctions, Zijsvelt said that ADB goes by the IMF programme with the government.

Carrad said that the bank would work out a new five year country operation strategy for Pakistan. It would be driven by results on the poverty front. Greater partnership with the private sector and NGOs is anticipated for poverty alleviation. A mission is expected in March to discuss it and also to finalise a three year rolling programme till 2003. Zijsvelt said that a bank mission last summer had worked out a three year programme of about $1.6 billion. This would be revised and some adjustments made in the light of the priorities of the government.

Responding to a question, Carrad said that the government would need to have at least 10 percent growth to meet the challenge of poverty which is complicated by the high population growth.

Answering a question, the ADB chief said the net inflow of aid to Pakistan last year was only 10 million. It was not negative. The reason was that a number of loans which were proposed for last year could not materialise, like the TEPI and capital market development project loan.

During the mission's discussion with the government, the issue of low net inflows to Pakistan was taken up and the Bank expressed willingness to redress the situation.

The agreed lending programme to Pakistan for $490 million includes the following projects:

Second NWFP Barani Area Development Project, ($40 million ADF) The project is being designed to improve economic, social, and nutritional well-being of the rural population, including women, in Barani areas of NWFP. The main components of the project include agriculture, rural roads, community infrastructure, rural credit, and community organisation.

Punjab Water Resources Sector Development Programme ($150 million ADF, $50 million OCR) The project will be (i) to support policy and institutional reforms and strengthen institutional arrangements for sustainable management of Punjab's water resources, and (ii) to rehabilitate and improve the Marala-Ravi Link Canal System.

NWFP Urban Sector Development Project ($70 million ADF) The project covers upgrading of water and sanitation facilities, roads, drainage, solid waste management, slums, the promotion of guided land development and housing schemes, and strengthening the provincial and local government institutions.

Non-Formal Education for Rural Women ($30 million ADF) The Project includes (i) improving the delivery of non-formal education programmes; (ii) providing micro credit; and (iii) social development components, including institutional capacity building and community participation.

Foreign Currency Import Finance Facility ($150 million OCR) this project is part of the ongoing trade, export promotion and industry programme. The project will provide assistance to the small and indirect exporters for foreign exchange requirement relating to exports.

Standby Category (not included in total),

Power Sector Restructuring Programme (Standby, $255 million OCR) The project focuses primarily on the privatisation of the Karachi Electricity Supply Co. The loan is in the standby category for 2000, pending early decisions and actions by the Government.