Challenge to economic stability overcome: ADB

[Naveed Yaseen]

ISLAMABAD (October 23 2009): The immediate challenge to Pakistan's economic stability has been overcome with the help of an International Monetary Fund (IMF) backed stabilisation programme, said a fact sheet of Asian Development Bank (ADB) issued here on Thursday.

"Stabilising macroeconomic fundamentals in view of the recent weakening of some indicators, implementing a second generation of reforms, addressing the infrastructure deficit, and improving implementation of development projects are the key challenges to the government going forward", ADB added. It said that Pakistan is an important partner of the Asian Development Bank (ADB) in its pursuit of fighting poverty in Asia.

The ADB fact sheet said that over the years, Pakistan has undertaken important economic and governance reforms that resulted in steady economic growth, allowing it to boost spending on poverty reduction programmes. Recently, however, it said that the global economic recession that followed a rapid increase in prices of food and other commodities world-wide, coupled with an array of domestic challenges, have impacted Pakistan's economic outlook negatively.

It added that Pakistan's poverty reduction strategy is encompassed in the Poverty Reduction Strategy Paper (PRSP) and the Medium-Term Development Framework for 2005-2010. Highlighting the relationship with ADB, the Bank said that Pakistan has received about $19.8 billion in loans since joining ADB in 1966, with about $14 billion disbursed as of the end of 2008.

A total of 284 loans were provided through the highly concessional Asian Development Fund window and the Ordinary Capital Resources window with $188 million provided in grants for 325 technical assistance (TA) projects, the Bank Facts sheet said.

It further said that a record-lending programme in 2008 included a $1.87 billion disbursement and $1.2 billion in newly approved assistance. As of December 2008, there were 62 ongoing sovereign loans amounting to $5.08 billion in net loan amount for infrastructure, social sectors, governance, and earthquake rehabilitation in the four provinces and at national level.

Under implementation were 31 ongoing TA projects worth $61.93 million, the Bank said. The ADB is working with the government and the private sector to improve the country's infrastructure, energy security, and basic public services. Aligned with national development objectives, ADB's partnership priorities aim to attract investment, create industries and jobs, and improve the quality of life of citizens.

A new Country Partnership Strategy (CPS) for Pakistan, approved by ADB's Board of Directors in March 2009, aims to support Pakistan's strategic objectives of prosperity and poverty reduction, it added. About Portfolio Performance, it said that in 2008, ADB's operations in Pakistan remained robust with record disbursements of $1.87 billion and a majority of currently active loans are expected to meet their respective development objectives.

Regarding the Impact of Assistance, it said that the ADB's support to Pakistan in recent years has helped the government implement its reform agenda, while contributing to macroeconomic stability and revived economic growth, as well as reduced poverty levels. This support, it said was premised on the three cornerstones of ADB's strategy, sustainable economic growth, inclusive social delivery, and pro-poor governance policies.

The Bank's fact sheet said that to support sustainable growth, ADB is providing substantial levels of assistance to bridge the infrastructure gap in the country, particularly in the areas of transport and energy. In this regard, it added that a multitranche financing facility (MFF) to support the Government's flagship National Trade Corridor Highway Investment Programme is helping Pakistan improve key sections of the motorway and expressway and cope with the infrastructure deficit in this vital sector.

Likewise, a facility to strengthen the power transmission network is helping to improve the efficiency of the system and will lead to reduced lines losses and improve availability of electricity, it added. To help support social development, ADB provided assistance to improve delivery of social services at the local government levels through a series of devolved social service programmes.

Support for governance reforms was centered at the provincial levels of government to improve fiscal and financial management and was instrumentalised through resource management programs. To help bring justice to the poor, the Access to Justice Program, closed in 2008 was designed to achieve greater civil society engagement for improved justice delivery, strengthened public oversight of the police, and the establishment of specialised and independent prosecution services.

Responding to the earthquake of October 8 2005, ADB is implementing the Earthquake Emergency Assistance Project (EEAP). The project supports government's efforts to rehabilitate earthquake-hit areas. The ADB has committed about $870 million in the form of loans and grants and arranged another $97 million in bilateral grant co-financing for the ADB-funded Pakistan Earthquake Fund.

Under EEAP, 71 percent of the targeted destroyed houses have been reconstructed, ensuring peoples' access to shelters. In addition, uninterrupted power supply stand to be restored in affected areas through rehabilitation of 9 hydropower stations and 10 grid stations.

In addition, ADB placed strong emphasis on strengthening social safeguards in Pakistan by providing technical guidance and improved monitoring and resettlement actions, which together significantly improved safeguard compliance and accelerated physical progress of ADB-assisted projects in the country.

Other major programs approved in 2008, it said were included Accelerating Economic Transformation Programme ($500 million), Sindh Rural Growth and Revitalisation Programme ($100 million), Sindh Cities Improvement Programme ($38 million; MFF: $300 million), Second Baiochistan Resource Management Programme ($100 million), Punjab Millennium Development Goals Programme ($100 million), Power Distribution Facility ($252 million; MFF: $810 million), Barani Integrated Water Resource Project ($75 million) and technical assistance loan for the Lahore Rapid Mass Transit System ($6 million).

About future directions, it said that ADB's CPS projects have planned assistance of $4.4 billion during 2009-2011 and an annual average lending of almost $1.5 billion. The focal areas delineated in the CPS 2009-2013 focuses on reforms and investment in energy and infrastructure. The CPS provides the framework for ADB's partnership priorities and the future direction of its assistance strategy in Pakistan, it added.

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