Symbolic gesture: Punjab to turn down US grants, but not loans yet

Published: May 19, 2011
The Punjab government has decided not to accept the grants as part of its new policy of “breaking the begging bowl,” he said.

The Punjab government has decided not to accept the grants as part of its new policy of “breaking the begging bowl,” he said.


The Punjab government has decided to turn down a $223 million (Rs19.08 billion) grant available from the United State Agency for International Development (USAID) for two development projects in southern Punjab, but had not yet made a decision to turn down US loan facilities, The Express Tribune has learnt.

“The issue regarding loan facilities from the US will be decided at the appropriate time. Presently only grants will not be accepted from this country,” said a senior Finance Department official on condition of anonymity.

The Punjab government has decided not to accept the grants as part of its new policy of “breaking the begging bowl,” he said.

The financial managers of the Punjab government and USAID representatives had been negotiating for 18 months for the provision of the grants.

In September 2010, the government and USAID signed an agreement under which the province would receive $147 million (Rs12.58 billion) to finance the Southern Punjab Basic Education Project, which aims to improve the education and literacy rate in the region.

In December 2010, the Punjab government and USAID signed another agreement for a $76 million (Rs6.5 billion) grant for the Southern Punjab Municipal Services Project, which would improve sanitation (both sewer and refuse), access to potable water and healthcare and transportation issues.

The government has now shelved these projects but will likely make allocations for the projects in the upcoming budget, the Finance Department official said, adding that the funds would be provided in phases.

Meanwhile, the Punjab government will continue to accept loans and grants from other countries and multilateral donors like the World Bank, Asian Development Bank, Japanese International Cooperation Agency, International Fund for Agriculture Development and International Bank for Reconstruction and Development. Pakistan is a member of the board of directors of these donor agencies, which extend soft loans, he said.

The Punjab government will also continue to accept loans and grants from friendly countries like China, Turkey and Saudi Arabia which do not attach conditions to their financial assistance, the official added.

The Punjab government has received 15 million pounds in financial year 2010-11 from the UK Department for International Development (DIFD) for an education project recently inaugurated by Chief Minister Shahbaz Sharif.

The official said that the extra financial burden as a result of the rejection of these grants could be met in the next three years through better financial management. The government is considering introducing a new tax on the rich to raise revenue, he said. He said the rejection of the grants would not result in a “huge burden” as the Punjab government was not receiving “handsome aid” from the US directly. The US provided such funds to the federal government, which then gave Punjab a share, he added.

The Punjab government has ceased special allowances extended to officials posted in various foreign and local-funded projects to save Rs.1.5 billion annually and this amount would go towards alleviating the financial shortfall, he said.

The provincial government had already got Rs390 billion in loans from various donor agencies and friendly countries to execute development projects in irrigation, education, health, roads and livestock development, he said. These were soft loans at interest rates ranging from 1.0 to 1.7 per cent payable in 20 to 30 years. The Punjab government pays Rs8 billion interest annually on these loans, he said.

Punjab government spokesman Senator Pervaiz Rasheed said the province would accept only those grants and loans which did not come with political conditions attached. He said the effect of refusing the grants would be compensated through rightsizing and rationalisation of current government expenditure.

“The projects in southern Punjab will not be halted. The government will instead arrange for funds for the projects through local resources,” he added.

Published in The Express Tribune, May 19th, 2011.

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Reader Comments (13)

  • Junaid
    May 19, 2011 - 1:10AM

    Look’s to me like a positive start. At last somebody is willing to think about Pakistan….. Bravo Mr-Shabaz Recommend

  • Rana
    May 19, 2011 - 1:27AM

    PML-N zindabad.Recommend

  • Kanishka
    May 19, 2011 - 2:31AM

    BEGGING CONTINUES…Nothing changes, only the donor changes to China..ha haRecommend

  • Nadeem Ahmed
    May 19, 2011 - 3:28AM

    Whats great about it? This money was for education.Recommend

  • Ali
    May 19, 2011 - 8:40AM


    I understand your point, but it also came with strings… US doesn’t just give money for nothing, it wants something in return and that somethng can be more than we are willing to pay back…

    We do need to break the US aid habit as it allows them to have a hold over us, by rejecting this aid and making alternative arrangements the Punjab govt. is in effect empowering itself and freeing itself from the Americans!Recommend

  • Akbar
    May 19, 2011 - 9:55AM

    Hypocricy at its best. Can he afford to make the nation fool any more? Recommend

  • Lollers
    May 19, 2011 - 10:26AM

    Nadeem you are so naive. I’m surprised that someone who is educated and can speak english cannot thing critically. You do realize what taking money from the US means right? It means lives, Pakistani lives. Specifically drone attacks as just one example to which we can’t stand up against because they (USA) fund the entire country.Recommend

  • Lodhi
    May 19, 2011 - 11:14AM

    Perfect, they have money to build cricket grounds and underpasses and flyover bridges in Lahore but when it comes to basic education for poor people of our region, it is a question of ego for these self-satisfying politicians.Recommend

  • Umair Mallick
    May 19, 2011 - 11:26AM

    How stupid…. This is utter nonsense. Pakistan pays for US more than it receives. It is well known fact that developed countries suck out of developing or under developed countries far more than one can imagine. And this is all done under the cover of symbolic aid which is provided to them on the hidden agenda and on fierce terms and conditions attached. It is too naive and stupid to reject the aid and keep the loans. Loans are the ones which are killing the counter. STOP LOANS…. and be careful with the aid. Take it like this: Nothing comes free in this world.Recommend

  • NA
    May 19, 2011 - 12:39PM

    American AID has never made a tangible asset to Pakistan. They always spent their money on services projects in which 90% of the money goes back to their pocket in terms of consultancy and audits. Has anybody seen any school/ college/ hospital/ Road being built by US for civilians. Yet they are involved in education/ family planning/ FM propaganda channels/ Security analysis Seminars/ Conferences. Yes it is heard from Halery once, that US is interested in upgrading Tube Wells in Punjab. What a level of cooperation and support by US with billions of dollars “AID”.Recommend

  • Imran Ali
    May 19, 2011 - 4:59PM

    Funds should not be halted from any donar. Only they demand is transparancy in utilizing their money. Its not rantional decision.Recommend

  • May 20, 2011 - 1:27AM

    USAID grant for Basic Education in Punjab should not be rejected as it will help Punjab & Pakistan meet UNDP Millennium Development Goals of 2015 which Pakistan signed in Dakar and Pakistan is set for failing to meet today. Today article 25A Education for All is just blank slogans and rhetoric to keep fooling people of Pakistan.Recommend

  • Imran
    May 22, 2011 - 5:19AM

    Weak minded people feeding on foriegn handouts are the biggest threat to pakistan. Its better that pakistanis swollow this bitter pill start to be creative and learn to do better hard work and create resourses for itself ! How do you think the western people and japan become so prosperous and powerful? No one gave them charities and money for ‘develoment work’. It was sheer determind hardwork and that took them out of thier misery.Recommend

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