Rebuilding riddled with risks

Pakistan­’s tainted past and reputation to implement slowly and poorly, and donor fatigue might hamper rehabili­tation.

Pakistan’s tainted past and reputation to implement slowly and poorly and donor fatigue might hamper fast-track rehabilitation and reconstruction in the flood-hit areas, warns a top official of the Asian Development Bank.

Juan Miranda, the regional director general of the Manila-based donor agency, cited four major risks to the multi-billion-dollar reconstruction phase. While talking about Pakistan’s performance with regards to international aid he said, “We don’t work fast, we don’t implement well and we go to the wrong place and above all (what if) the international community does not come for reconstruction due to donor fatigue”.

Donor fatigue is a phenomenon in which people or countries no longer give to charities, despite their generosity record in the past. There are a number of causes for donor fatigue, including pressure to donate, overstretched budgets, particularly frustration with mismanaged donations. The United Nations has already complained that due to Pakistan’s “image deficit” the international community was reluctant to donate generously. Juan Miranda said that the damage inflicted by the floods was tremendous and, with winter approaching fast, people may be in trouble if they were not taken care of adequately.

The ADB has announced it will give Pakistan $2 billion in loans for the reconstruction phase, a blend of concessionary and commercial credit. Miranda said the amount of $2 billion was the minimum with an aim to give hope to the survivors. “The cost of money cannot be determined before the Damage and Needs Assessment. It will be a mix of concessionary and commercial loan”.

In order to implement the project on fast track, the ADB would award contracts to construction and engineering companies and would not wait for international tendering, he added. Miranda said the payment would be made over a 30-month period.

“We will pay against progress”, Miranda said.

He said the ADB would compress the paperwork for an early start of reconstruction projects. He said Pakistan may need more money and the decision to extend more would depend upon the outcome of the Damage and Needs Assessment. The joint teams of the ADB and the WB would carry out the assessment. They are tasked to complete the exercise by mid-October. To a question, Miranda said Pakistan can appeal for loan write-offs but the situation was not ripe for that. The ADB has also announced to establish Flood Trust Fund aimed at offering other donors a mechanism of financing and avoiding duplication of projects.

The ADB official warned that the economic reforms programme should not be derailed because of reconstruction. “The fundamentals should go in right direction”. Pakistan is undertaking tax reforms under the umbrella of the International Monetary Fund and there are apprehensions that the government may hide itself behind the reconstruction of the flood-ravaged areas to avoid the much-needed overhaul of the tax system.

Published in The Express Tribune, August 21^st, 2010.