950830

Jafarey opens new office

ADB loan approvals

way behind

disbursements in '94

NISAR AHMAD SHEIKH

ISLAMABAD: V.A. Jafarey, Adviser to the Prime Minister for Finance and Economic Affairs, has said it is a matter of happiness that project supervision is being centralized by the Asian Development Bank in response to a request made by the Pakistan government and that the ADB fiscal 1994 was a model year for Pakistan in terms of performance.

He was inaugurating the new office of the ADB here on Wednesday morning with the Vice-President of the bank, Bong Suh-Lee, who had especially come from the headquarters to be present at the inauguration.

Elaborating further on the performance of Pakistan as a model year during fiscal 1994, he said that as a result of the operational and institutional steps taken by the government for effective aid utilization and the assistance provided by the bank to improve project quality and country programming, Pakistan achieved a record disbursement of $738 million in 1994. It was the highest amount disbursed to any developing member country of the bank in the year. Pakistan also topped the list in terms of contracts awarded; these stood at $679 million. Not only that, Pakistan recorded the largest number of projects completed.

V.A. Jafarey said that curiously the loan approvals in 1994 were way behind disbursements in 1994, totalling only $407 million. We are hoping that the approvals in 1995 will be double the amount, he added. On our side, he said every effort is being made to meet the conditions for approval in time for the ADB board to approve a vital set of projects and programme. These include assistance to financial sector, technical education, forestry,national drainage, rural access roads and Ghazi Brotha, an hydel project being undertaken in the country after more than two decades. In 1996, he said, we look forward to great support for the social action programme and commitment to national irrigation programme.

The PM's adviser said that Pakistan has been a major beneficiary of the concessional window of the ADB - the Asian Development Fund. It enabled Pakistan to received a net transfer of resources of $392 million in 1994, the highest among the developing member countries. This trend will continue if all the projects lined up for approval in 1995 go through the process smoothly.

V.A. Jafarey said that our economy has entered a crucial stage. We have accepted the challenge of de-regulation, liberalization and privatization. We are committed to a reduction in the fiscal deficit in a phased manner. In fact the increase in revenues, especially the direct tax component, has never been so high in a single year as in 1994-95. We are also maintaining the process of tariff reforms although at a reduced pace. Maximum tariff has been brought down from 125 percent in 1990-91 to 65 percent in 1995-96. The financial sector has been considerably freed and the central banks has begun to use market-oriented instruments for regulating money supply.

Exports have increase by 16 percent compared to a negative growth in 1993-94. Foreign investment has more than doubled, rising from $643 million in 1993-94 to $1423 million in 1994-95. All these factors have contributed to areal economic growth of 4.7 percent compared to 3.8 and 2.3 percent in the previous two years.

The adviser, however, said that this level of growth is still below our potential and a lot less than required to enter the high-growth league. We hope to overcome the energy shortage through implementation of schemes, under a new policy, which is oriented towards private enterprise. Efforts to improve rural infrastructure have begun. We need to invest in social infrastructure to deal with illiteracy, disease and the neglect of woman and children and the SAP is the financial investment. All these investment we must undertake in a stable macroeconomic framework while restraining inflationary trends. The next year's programme aims at achieving a GDP growth of 6.5 percent and to bring inflation down to a single digit. Despite the fiscal constraints, the investment programme protects the critical energy and social sector investments.

He pointed out that in the remaining years of this century, much-needed investments will have to be made in drainage, flood control and irrigation in view of the semi-arid nature of our agricultural economy. "I very much hope that the future directions of the ADB lending will keep these imperatives in view," he stressed.

Thanking the ADB on behalf of the people and the government for the contribution it has made to Pakistan's programme, he expressed the fervent hope that the bank will continue the good work into future.

V.A. Jafarey declared open the new Pakistan resident mission office and prayed that under the active leadership of S.B. Chua, Resident Representative, it will become a forum for deciding as many lender-borrower issues locally as are called for by the demands of achieving decisional optima.

Bong Suh Lee, Vice-President, Asian Development Bank, in his address of welcome, said the bank and Pakistan have been partners in development for nearly three decades. During this time, Pakistan has been one of the larger recipients of bank assistance.

Appreciating the progres achieved by the Pakistan government in carrying out various economic reforms, he said that notable successes have been in deregulating the financial sector, in privatizing public sector companies and in promoting private-sector involvement in the energy sector. We understand the challenges the government faces in managing the economy and, at the same time, emphasize the importance of continuing to pursue the course of reforms that it has originally set out to do, he added.

The bank's resident representative, S.B. Chua, said that bank and Pakistan have over the past 28 years worked together as partners for the development of Pakistan when the ADB came into existence in 1996, the very first loan approved by the bank for Pakistan was in 1968. To strengthen the cooperation the bank opened its Pakistan resident mission in July 1989.

Talking of the functions by the resident mission, he said that one of them is to speed the inflow of assistance from the bank to Pakistan.

He held out the assurance that the mission will be taking full responsibility for implementing an increasing number of projects and technical assistance programme. This is not only in accordance with the recommendations of the bank's task force on improving project quality but also is the expressed wish of the government.

We expect that by the end of the year, the number of projects to be delegated to our office for administration will reach 20 or about one third of the country's portfolio, he said. The move to the new premises, where better planned work space and communication facilities are available, will enable the mission to do its job even better, he hoped.