ADB to give $10bn for development in five years

ISLAMABAD: The Asian Development Bank (ADB) will provide about $10 billion in fresh assistance to Pakistan over the next five years to speed up economic recovery process.

This was agreed in a virtual meeting between Federal Minister for Economic Affairs Makhdum Khusro Bakhtyar and Asian Development Bank (ADB) Vice President Shixin Chen. Secretary Economic Affairs Division Noor Ahmad and ADB’s Country Director also attended.

The meeting discussed key priorities of the Country Partnership Strategy (CPS 2021-2025) expected to be approved by ADB’s board of directors in January. The meeting also discussed County Operations Business Plan (COBP 2021-2023) and ADB’s ongoing support for Pakistan’s reforms programme.

The CPS 2021-25 has been finalised by the two sides as a response to the economic and social challenges posed by the health pandemic and to address Pakistan’s persistent structural challenges. The ADB’s assistance over the next five years will focus on three key inter-linked pillars — improving economic management, building resilience and boosting competitiveness and private sector development. About 33 per cent of the total funding would be focused to energy sector, informed sources said.

An official statement quoted the ADB’s Chen as appreciating the government’s strategy to successfully combat the impact of Covid-19 pandemic. He reiterated the bank’s commitment to support the government’s reform agenda and to speed up the economic recovery process. “ADB plans to provide Pakistan about $10bn in fresh assistance for various development projects and policy-based programs over the next five years under its new CPS”, he was quoted as saying.

Final allocation at the end of the CPS five-year period will depend on available resources, project readiness and the outcome of country assessments.

Macroeconomic stabilisation, domestic resource mobilisation, reforming public sector entities, energy sector reforms and financial market deepening would be covered under the first pillar of the CPS — improving economic management. The second pillar — building resilience — involves education and health sectors, food security, clear water, affordable housing and social protection. Boosting competitiveness and private sector development — Pillar 3 — would cover projects in city improvements, renewable energy and energy efficiency, rural infrastructure, regional connectivity and access to finance.

The ADB’s total indicative assistance for COBP 2020-22 was $7.1bn of which $6.5 had already been disbursed for various projects and policy- based programme loans. The ADB has indicated resource allocation of about $6.3bn for 44 projects for COBP 2021-23. The five-year CPS is a primary platform for thematic areas for development objectives while the three-year COBP is usually a rolling document, reviewed on annual basis in terms of implementation.

Bakhtyar told the ADB side that the proposed CPS framework was in line with priorities of the present government with greater focus on improving economic management, building resilience and boosting competitiveness. This, he believed, would help private sector development, allow Pakistan to unleash the growth potential of public-private partnership (PPP) sector and help a faster post Covid-19 recovery.

He assured the ADB vice president that government would continue structural reforms in multiple areas of economy, governance and institutions including simplification of decision making for project approval and implementation and regular portfolio review of foreign aided projects.

A national coordination committee had also been constituted to ensure timely implementation and completion of projects and smooth disbursement of loan and grant components.

The minister suggested new areas for ADB’s assistance including support for PPP, strengthening food security infrastructure, supply chains, developing forecast mechanism for demand and supply and enhancing agro-productivity and operationalisation of the EXIM Bank to effectively provide credit, guarantee and insurance products to boost the country’s trade volume.

The two sides agreed to continue discussing ways to deepen ADB and Pakistan’s development partnership and ensure effectiveness of the ongoing portfolio.