The Asian Development Bank (ADB) on Wednesday approved a $650 million (Rs55.6 billion) loan to help Pakistan rebuild flood-damaged infrastructure, as international lenders have started releasing loans after the government undertook tax reforms a fortnight ago.
The loan, a largely expensive one, was approved by the ADB’s board of directors. The ADB labelled the lending as “emergency assistance” that came eight months after floods submerged 10 per cent of the country. Following the floods, ADB had announced that it would provide $2 billion in assistance with the condition of overarching control of spending, a harsh condition rejected by the finance ministry.
Out of $650 million, $600 million is a commercial loan that the country will return in 32 years with a grace period of eight years. The remaining $50 million will be a concessional one, which will be returned in 40 years with a one per cent interest per annum.
Total debt and liabilities of the country crossed Rs11 trillion in December 2010 for the first time in the country’s history.
The ADB funds will be used to reconstruct damaged roads, bridges, irrigation systems, as well as flood and drainage protection works in the worst-affected areas.
The international lenders opened lending windows after the government levied Rs53 billion in taxes through a presidential order on March 15. Within a couple of weeks, following this step, both the World Bank and ADB have approved a total of $1.2 billion that will largely meet the country’s budgetary financing needs.
“This ($650 million) assistance comes in direct response to a request from the Government of Pakistan and represents ADB’s strong and continued commitment to the people of Pakistan,” said ADB’s Central and West Asia Department Director General Juan Miranda. “The outcome of the project will be the restoration of critical infrastructure to restore livelihoods and access to markets which will support economic and social recovery,” he added.
The emergency loan will help in reconstruction of 790 km of national highways and 800 km of provincial roads and bridges to safer, higher standards. It will also upgrade flood protection embankments and other drainage infrastructure for 1.5 million hectares of agricultural land.
Published in The Express Tribune, March 31st, 2011.
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