IDB approves $252m loan for Pakistan

Financing provided for construction of Mohmand dam, partial vaccine procurements

ISLAMABAD:

The Islamic Development Bank (IDB) has approved a $252 million loan for Pakistan in order to bridge the financing gap for construction of Mohmand dam and partially finance the vaccine procurements.

The regional bank approved the two separate loans last week and the agreement for $72.5 million lending for vaccine procurements was signed on Monday in Islamabad.

The agreement was signed during the visit of Dr Muhammad Al-Jasser, the president of the Islamic Development Bank (IDB), who is in Islamabad on a four-day visit to attend the 17th Extraordinary Session of the OIC on Afghanistan. The IDB president called on Federal Minister for Economic Affairs Omar Ayub Khan.

The bank’s financing for the procurement of Covid-19 vaccine will help contain the its spread, according to an announcement by the Ministry of Economic Affairs .

Meantime, in a separate development on December 13, 2021, the IDB, also approved $72.5 million of funding to support Pakistan’s nationwide vaccination efforts in the face of the ongoing Covid-19 pandemic.

Under this approval, the country’s IVAC Covid-19 Vaccine Support Project – also co-funded by the World Bank and the Asian Development Bank - will receive $70 million from IDB as well as $2.5 million from IDB’s Islamic Solidarity Fund for Development (ISFD).

This comes in the framework of the second track (R2) of IDB Group’s $4.56 billion Strategic Preparedness and Response Programme (SPRP), specifically designed to support member countries with their health and economic recovery programme against the Covid-19 pandemic.

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The funding will contribute to Pakistan government’s efforts in vaccinating 70% of the population (18 years and above) eligible for vaccination, including health care and frontline workers and other priority groups. So far, 40% of the eligible population has been vaccinated.

“Chaired by IDB President and Chairman of the Board Dr Muhammad Al Jasser, the Board of Executive Directors of the bank, on December 18, 2021, gave the green light to the allocation of $180 million to contribute to financing of the strategic Mohmand Dam and Hydropower Project in Pakistan’s Khyber-Pakhtunkhwa (KP) province,” according to the ministry.

Once completed, Mohmand Dam will be the fifth highest Concrete-Face-Rock-Filled Dam (CFRFD) in the world and will add 800 MW to the country’s installed hydropower capacity. It will also provide sustainable clean potable water to two million residents in Peshawar while boosting food security through vital support for irrigation and agricultural activities on 6,773 ha of new farmlands.

To date, Pakistan’s energy sector has received the largest share of IDB Group development interventions by absorbing 68.4% or about $9.3 billion of the group’s investments, the ministry stated.

The IDB’s financing for Pakistan is covering all the major sectors of economy such as energy, industry, agriculture, transport, health and financial services. The IDB president assured of strong commitment to further strengthening and expanding its partnership with Pakistan.

Al-Jasser reiterated that the IDB is one of the leading development partners of Pakistan and fully supports the government of Pakistan’s development vision and priorities. He assured the minister that the bank will continue to mobilise more financial resources for developing infrastructure, uplifting social sector and achieving sustainable economic growth. It was also assured that the IDB will continue to leverage private financing to support trade needs including import of petroleum products.

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Ayub thanked the IDB president for visiting Islamabad and his continued support to Pakistan. He applauded IDB’s role in supporting the member countries in Covid-19 response, recovery and procurement of vaccine and saving lives and livelihood amid the pandemic. The minister also thanked the IDB president for his resolve in supporting the financing needs of the country in future.

He appreciated IDBs support in green and clean energy development projects, like Mohmand Dam Hydropower Project, which will not only generate 800 MW electricity, but also enhance Pakistan’s Water Storage Capacity by 1,293 million acre feet (MAF), create food security buffer, provide clean drinking water to the residents of Peshawar and will create more than 6,000 direct new employment opportunities for the local people. The economic affairs minister appreciated the role and endeavours of the IDB president and his team for arranging this financing at a very challenging time.

The IDB president assured of further strengthening the partnership with Pakistan. It was also highlighted that the IDB did not have a regional office in Pakistan like in Turkey and some other member countries. During the discussions, the economic affairs minister underlined the need to have a regional office in Islamabad for better collaboration and engagement with the bank.