Italy extends €40 million loan

Italy to extend loan for development of social safety nets in rural areas of Balochistan, K-P and Fata.

ISLAMABAD: Italy will extend a loan of €40 million (about Rs4.6 billion) for the development of social safety nets in rural areas of Balochistan, Khyber-Pakhtunkhwa and the Federally Administered Tribal Areas (Fata). The concessional loan is part of the pledges made in Tokyo almost two years ago.

Italian Ambassador to Pakistan Vincenzo Prati and Sibtain Fazal Halim, secretary of the economic affairs division, signed an agreement in this regard on Friday.

Although the Italian government committed to give €62 million to Pakistan in a Friends of Democratic Pakistan (FODP) meeting held in Tokyo in April 2009, it has so far disbursed less than €2 million.

The major objectives of the loan are establishment of a socio-productive infrastructure system and safety net mechanism. The loan proceeds will also be utilised for enhancing access of the poorest to microfinance to increase their capacity in developing productive and income-generating activities.

The funds will be invested through the Pakistan Poverty Alleviation Fund in bottom-of-the-pyramid, rural areas. The expected major outputs are strengthening of social networks and community institutions in these areas, empowerment of communities and establishment of social safety nets.

The Italian Cooperation portfolio in Pakistan at the moment is worth €203 million, of which €133 million are earmarked for ongoing activities, while €70 million are to be disbursed under agreements to be signed soon.

Published in The Express Tribune, January 15^th, 2011.