Pakistan, ADB to ink $250m loan next week

Loan would facilitate trade activities between Pakistan, India and Afghanistan

ISLAMABAD: Pakistan and the Asian Development Bank (ADB) will sign a $250 million loan agreement next week, in a bid to boost cross border trade activities with India and Afghanistan as part of a regional strategic initiative, backed by multilateral institutions and some friendly countries.

The loan agreement will be signed on the side-lines of the 15th Ministerial Conference of Central Asia Regional Economic Cooperation (CAREC) that will take place in Islamabad on October 25-26.



Pakistan has been vying for “appropriate representation” by ten-member countries, as so far most of the CAREC members have communicated to send their vice ministers to attend the Ministers’ Conference, according to sources in the Ministry of Finance.

Finance Minister Ishaq Dar this week chaired a meeting to review the preparedness for holding the event and directed that these countries may be approached again through the Foreign Office to send appropriate representation, said the officials.

One of the reasons for low-level participation by member countries was that Pakistan had also sent bureaucrats to attend these meetings in the past, said the sources.

A Finance Ministry hand-out that was issued Thursday stated that delegations from CAREC states including Afghanistan, Azerbaijan, China, Kazakhstan, the Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, Turkmenistan, Uzbekistan and Georgia will participate in the CAREC Ministerial conference. It officially did not disclose the level of representation.

Finance Minister said on Wednesday that the CAREC conference would provide member countries an important opportunity to further collaborate in areas of mutual interest to improve regional cooperation.



Dar added that the high-profile visits as well as CAREC conference are proof of the confidence of the international development partners in the strength of Pakistan’s economy.

The ADB is facilitating Pakistan to organise the event. Next week, International Monetary Fund Managing Director Christine Laragrde and ADB President Takehiko Nakao will also visit Pakistan to attend the CAREC conference.

‘Linking Connectivity with Economic Transformation in CAREC’ is the theme of the conference. On the sideline, Pakistan and the ADB would sign the $250 million loan agreement for Integrated Transit Trade Management System (ITTMS) project. The ADB calls the project as the CAREC Regional Improving Border Services Project (RIBS).

The Manila-based lender had approved the loan in December last year but it remains ineffective to date due to delays in finalising the arrangements necessary for disbursements. The project will run for five years, with a target completion date of December 2021, which is likely to be missed due to almost a year delay to make it effective.

The ADB is providing $150 million expensive commercial loan while $100 million will be given out of its concessionary financing pool. The government will also contribute $50 million from its own resources.

The project will construct modernised border point infrastructure and facilities, compliant with internationally accepted standards in Chaman and Torkham - the two main transit stations for cross-border Afghan trade - as well as in Wagah, the only open land route connecting South Asia to Central Asia, according to the ADB.

The plan to improve trade among regional countries is being pushed at a time when mood in the three neighbouring countries is tense.

The project is part of the ADB-supported CAREC programme, a 10 country-partnership for regional cooperation in transport, energy, trade facilitation, trade policy, and other key sectors of mutual interest.



In 2007, the then eight member countries had agreed to a $18 billion strategy to improve Central Asia’s network of roads, airports, railway lines and seaports to make the region a vital transit route for trade between Europe and Asia - a modern-day equivalent of the ancient Silk Road.

The ADB’s loan will be utilised for ICT equipment and connectivity to link each border point with the central customs database, security trade facilitation equipment, and the construction of border point infrastructure.

As part of CAREC’s initiative for trade facilitation, the project will help CAREC countries take advantage of more efficient trade routes through Pakistan and, reciprocally, encourage Pakistan to play a strategic role in creating a larger regional market for intra-CAREC and inter-CAREC trade, according to the ADB.

The loan proceeds will also be utilised for establishing Pakistan Land Port Authority to manage national land border points and develop modern administrative and financial procedures so that project facilities will be under the custody and management of a specialised land port operating agency. 

Published in The Express Tribune, October 21^st, 2016.

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