At a time when Pakistan is in dire need of friends, the Asian Development Bank (ADB) has said the country can avail $3.6 billion under its $5.6 billion project financing facility out of which so far $2 billion have been disbursed for under implementation projects. Talking to reporters on Thursday, Country Director, Pakistan Resident Mission, ADB, Werner E. Liepach said the bank will keep providing project financing to Pakistan but the program lending for budgetary support, will be provided only after the issuance of letter of assessment from the International Monetary Fund.
Confronting challenges
Pakistan is faced with big challenges but there are equally big opportunities. The issues are well analysed and how to resolve them is the challenge. “We are in a low growth track and it is difficult to get out of it without energy. Pakistan is located in a region that is booming with growth, the main challenge is to get integrated in the regional economy. Linking Pakistani ports with the land locked Central Asian States will immensely benefit the country,” he added. ADB is interested to finance infrastructure projects as no country can grow without infrastructure. Pakistan has huge growth potential in agri-business, financial sector, logistics, supply chain and equally good labour force which have not been fully exploited, he said adding “ADB will help the government to tap this huge potential”. Denying the impression that International Financial Institutions (IFIs) were jointly penalising Pakistan, he said there is a consensus among the donors that macro economic stability will be looked after by IMF, which has expertise in the area. The programme lending by ADB will be made on the basis of the letter of assessment of IMF. He explained that most of the share holders of IMF and World Bank were also share holders of ADB and they wanted to adopt a consistent approach. “We are coordinating but there is no legal binding” and “ADB’s project assistance for Pakistan will continue even without IMF program.”
Moving forward without IMF
When asked whether the decision of the government not to opt for IMF program was the right approach, he said, IMF programme gives a seal of approval to the international community. The government is of the view that they are in a comfortable position to repay IMF. “It will be challenging but sometimes you only move forward when there is pressure”. However, he said, the performance of the government was also dependent upon the global economy, as country’s economy is not disconnected from it.
During the current calendar year, ADB will make disbursement of $550 million to Pakistan, while she will be repaying $700 million to the bank. “Disbursements need to be enhanced as otherwise it may hurt economic growth”, he said adding that the bank could provide $1.5 billion per annum to the country. He said the bank was following a multi tranche financing facility for Pakistan under which 8 projects were under implementation including distribution, transmission and alternate energy projects, national highways improvement and national trade corridor and Punjab irrigated sector project. “Our commitment is there, the government should bring ready projects for financing” he added.
We are getting away from the business of making commitments, now we will prepare projects, present it to our board and once it is approved the releases will be made for fast implementation, he said adding that the assistance would be provided in energy, water, transport sectors. Currently there are 23 on going projects in the country for which 27 loans were active as some projects have two loans, out of which 5 projects would be completed in the next 6 months while 18 projects will remain under implementation.
Capacity development
On financial assistance for Diamer Bhasha Dam, he said, ADB will provide assistance after completing bankable feasibility on the project, as the bank is following project readiness approach. He said the dam was too big a project for ADB and it alone cannot provide the financing and will work with other IFI to develop a financial package. He said the government has requested financial assistance for the removal of circular debt but the main issue was finding a permanent solution so that debt did not pile up again. “We are working to find a solution for circular debt,” he stated. The bank is likely to finalise the solution by the end of next month.
In reply to a question on the performance of access to justice programme funded by ADB, he said its evaluation report was complete and will be out soon. He said the bank has learnt many lessons from the project. According to him the bank was also interested to provide assistance for the restructuring of Pakistan Railways. He said introduction of competition in railways can improve its performance as many countries have already achieved it by introducing private freight trains.
