Aiding reconstruction: World Bank, Japan provide $518m for rehabilitation

Funds will primarily be spent in flood-and militancy-hit areas of K-P, Fata.

ISLAMABAD:

The international donors Friday sanctioned over $518 million (Rs44.5 billion) in loans and grants to help vulnerable communities in areas affected by floods and militancy.

The Executive Board of the World Bank approved a loan of $250 million and a grant of $35 million to supplement recovery efforts in Khyber-Pakhtunkhwa and Federally Administered Tribal Areas (Fata). The grant, the bank said, will be co-financed by the Multi-Donor Trust Fund, established in 2009 to provide support for humanitarian, transition, reconstruction and development programmes in Khyber-Pakhtunkhwa, Fata and other militancy-hit areas of Balochistan. So far the fund could fetch only $130 million from 10 donors.

“This combined support comes at a critical juncture in order to assist the poor and vulnerable households to cope with income shock due to militancy crises in Khyber-Pakhtunkhwa and Fata,” AFP quoted a World Bank official as saying. Under the scheme, the government will provide conditional cash grants to vulnerable households in conflict-hit zones. The cash, it is learnt, will be linked to sending children to schools.

Japan and Pakistan also signed an agreement for a $233 million soft loan.

Japan had earlier pledged to give a 40-year concessionary loan of $500 million during a Pakistan Development Forum meeting.

The soft loan is divided into two components: $60 million will go directly to provide budgetary support, while $173 million (Rs 15 billion) will be provided to the provincial government to rebuild rural roads and bridges. Floods had inundated one-fifth of Pakistan’s total area and affected one-tenth of its population.

The remaining $267 million loan would be disbursed via non-governmental organisations. However, the amount will have to be paid back by the state.

“The government of Japan is fully committed to support Pakistan in its endeavour to fight terrorism and at the same time to create a sustainable economic foundation,” said Japan’s ambassador to Pakistan Chihiro Atsumi.

Japan will also provide $60 million to ease budgetary constraints. This component will be utilised to cover payment for food, fertilisers, seeds, construction material in floods-hit areas.  “Khyber-Pakhtunkhwa and Fata face a huge challenge of rehabilitation of households affected by the ongoing crisis,” said Rachid Benmessaoud, the World Bank’s Country Director for Pakistan. He said the loan and grant was part of the bank’s strategy to maximise benefits to poor and vulnerable households.

The project will be implemented by the Provincial Reconstruction, Rehabilitation, and Settlement Authority in partnership with Fata Secretariat and other stakeholders. The cash grants would assist vulnerable households to re-establish themselves and prepare for the post-crisis long-term rehabilitation programme.

“The mechanism of cash grants will also be used to promote human development by investing in the education of beneficiaries’ children. The cash grants will provide incentives to eligible households to comply with co-responsibilities such as sending their children to primary school to ensure the continuity of cash assistance. The project will also strengthen the necessary capacities and systems for post-disaster safety nets.”

Published in The Express Tribune, January 22nd, 2011.