In yet another scathing indictment of Pakistan’s economic management team, the Asian Development Bank on Sunday declared $692 million in loans to Islamabad to be “at risk” after the county was deemed to be in violation of the guidelines set out by the international lender for the repayment of those loans.
The declaration comes a day before Pakistan is due to hold its ‘2011 Country Portfolio Review’ with the Manila-based lender. The review will start on Monday (today) and continue till May 19, and will attempt to resolve the differences between the ADB’s expectations and Pakistan’s ability to deliver on its commitments.
The ADB handed a report to Pakistan which outlined the lender’s initial assessment of Pakistan’s compliance with the conditions associated with ADB loans.
The loans in question, which represent 19.4 per cent of the ADB’s lending to Pakistan, were declared “at risk” due to slow implementation. The loans were meant for development projects in Balochistan and Khyber-Pakhtunkhwa, where law and order situation has slowed down government projects.
In addition to the “at risk” loans, another 12.9 per cent of the $3.6 billion that the ADB has lent to Pakistan were deemed to be only “partly satisfactory” and another 6.5 per cent were identified as “facing potential problems”, according to a report
The ADB has identified a wide range of problems that Pakistan faces when implementing the development projects financed through ADB loans. The lender complains that Islamabad is often too slow in completing its end of the tasks for implementation, including a delay in establishing project management units (PMUs), understaffed and underperforming PMUs, slow consultant selection, and poor delivery by consultants and contractors.
The ADB also complains that Pakistan frequently delays the awarding of contracts and disbursing money. The Pakistan government also does not comply with international guidelines on procurement as well as environmental and social safeguards.
The ADB is one of the largest multilateral lenders to Pakistan. In 2010, the ADB disbursed $799 million to Pakistan, which was only 85 per cent of the amount committed for the year.
Delays in implementation on the government’s part are blamed for the incomplete disbursals. The government has awarded only $799 million in contracts against the $1.1 billion it was supposed to have awarded in 2010. The ADB also complains that Pakistan frequently does not meet its own financial commitments to ADB-funded projects.
The international lender had pledged $300 million in aid to Pakistan at the last Friends of Democratic Pakistan (FoDP) meeting. After the devastation caused by the floods in 2010, the ADB extended $635 million in assistance to Pakistan for road and highway reconstruction projects in Sindh.
Published in The Express Tribune, May 9th, 2011.
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