‘Cracks’ appear in ties between Pakistan and ADB

Published: February 15, 2013
SHARES
Email
One of the reasons behind the friction is said to be the preferential treatment the finance minister gives to Washington-based World Bank.

One of the reasons behind the friction is said to be the preferential treatment the finance minister gives to Washington-based World Bank.

ISLAMABAD: As the country needs foreign loans to bolster its dwindling reserves, cracks are apparently appearing in relations between Pakistan and the Asian Development Bank – once considered a friendly lender which has come to the country’s rescue in difficult times.

ADB, the largest lender to Pakistan, does not seem to have the sort of cordial relations that it enjoyed before 2010, according to sources in diplomatic circles and the finance ministry.

On the one hand, Finance Minister Dr Abdul Hafeez Shaikh is reportedly giving less importance to the ADB’s top management, and on the other the lending agency has changed course on issues like Diamer Bhasha Dam.

In the latest episode, Shaikh apparently attempted to avoid a meeting with the visiting Director General of ADB for Central and West Asia Department, Klaus Gerhaeusser. According to finance ministry officials, Shaikh did not confirm his meeting with Gerhaeusser even after the latter had left for Islamabad.

On Wednesday, Shaikh’s personal staff told relevant officials that the minister was not well and would not be able to confirm the scheduled meeting for Thursday noon. They said he had not come to the office for the last two days because of ill health. Later, the meeting was postponed.

Afterwards, on the repeated insistence of the ADB’s Islamabad office, the meeting was arranged at the minister’s residence in the evening.

Shaikh was not available for comments.

However, according to the Press Information Department, Shaikh met with Prime Minister Raja Pervez Ashraf on Thursday.

ADB lifeline

In 2008, when Pakistan was in deep financial crisis and was on the verge of default, almost all western bilateral and multilateral lenders blocked assistance in a bid to put pressure on Islamabad to sign a bailout agreement with the International Monetary Fund.

Even at that time, the ADB came forward and signed a $2.2 billion Accelerating Economic Transformation Programme in September 2008. It immediately released the first tranche of $500 million, helping Pakistan avoid possible default, said a former federal secretary, who spoke on condition of anonymity.

“ADB has remained a better development partner than the World Bank and has offered loans at preferential terms,” said an official of the Economic Affairs Division.

Until the end of 2011, the bank had disbursed $16.8 billion to Pakistan, making it the single largest creditor. Despite that, Pakistan has tilted towards the World Bank because of its pro-US foreign policy.

Four and a half years gone, the country’s economy is again passing through tough times and this time all international lenders, including the ADB, have stopped offering budgetary support. This will put further pressure on the rupee which, in the face of depleting foreign currency reserves, has already crossed the 100 mark against the dollar.

One of the reasons behind the friction is said to be the preferential treatment the finance minister gives to Washington-based World Bank. Shaikh is a former employee of the bank.

As the country’s finance minister Shaikh is a member of the ADB’s Board of Governors. However, out of three meetings held since he became the minister, he attended only one meeting in 2011 in Vietnam. ADB’s spokesperson in Pakistan Ismail Khan confirmed that Shaikh took part in one meeting.

The finance minister has also had limited engagement with ADB President Haruhiko Kuroda, but has held a number of meetings with the WB chief.

Owing to the same reasons, the ADB president did not participate in a meeting of the Friends of Democratic Pakistan, held in Washington, according to people privy to the matter.

Published in The Express Tribune, February 15th, 2013.

Like Business on Facebook to stay informed and join in the conversation.

Facebook Conversations

Reader Comments (10)

  • Ismail bhai
    Feb 15, 2013 - 2:47AM

    As usual backstabbing those who have helped u…. Not new for pakistanis

    Recommend

  • Feb 15, 2013 - 12:33PM

    one more step added to pakistan international isolation.pakistan already lost and loosing the remaining countries and institutions one by one.remember dont take ADB for granted,ADB,IMF and WB are all inter linked if ADB moves away from pakistan then IMF and WB along with other small doner will move away from pakistan.IMF already has stringent conditions in place that will serve as an instrument for all future loan program negotiations and as far as world bank is concerned it cannot support pakistan without ADB and IMF which it had made it clear in diamer bhasha dam case as far as pure financing is concerned,I am not talking about NOC from India that is another instrument of negotiation.Recommend

  • Anoni
    Feb 15, 2013 - 12:34PM

    What more can be expected from an imported Finance minister. He will just go back to WB once his job is finish. j

    Look at the mess he has created so far. Nothing seems to function now. yet he is still the finance minister

    Recommend

  • H. Khan
    Feb 15, 2013 - 12:38PM

    Dr Abdul Hafiz Sheikh has been a disaster for Pakistan economy. Hopefully next time WB will be more careful before recommending FM

    Recommend

  • Aziz
    Feb 15, 2013 - 1:37PM

    @Ismail bhai:
    Drop dead.

    Recommend

  • meekal a ahmed
    Feb 15, 2013 - 2:45PM

    @H. Khan:

    Was Sheikh “recommended” by the WB?

    My experience is that these institutions do NOT interfere in such matters — and certainly not overtly. Of course, they would like someone who they can talk to and who understands the technical stuff. That is always a plus in building a working relationship.

    Recommend

  • Feb 15, 2013 - 3:12PM

    very sad as a country pakistan cannot selectively choose the International Financial institutions especially when it is the matter related to financial giants like IMF,ADB and WB but unfortunately pakistan finance minister decided to choose selectively.

    Recommend

  • syed baqar ahsan
    Feb 15, 2013 - 4:06PM

    Pipeline and Gawader will not be easy for Americans to digest,ADB,IMF,WB etc will be as usual use then to twist the arm of Pakistan,if that happens then USA/NATO troops will face the music in Afghanistan and in withdrawal.Better for west is to mind own their business.

    Recommend

  • Feb 15, 2013 - 10:14PM

    Shahbaz, when you use the word ‘crack’, do you mean substance or some personality issue?

    Recommend

  • Feb 18, 2013 - 4:17PM

    @syed baqar ahsan:
    “Pipeline and Gawader will not be easy for Americans to digest,ADB,IMF,WB etc will be as usual use then to twist the arm of Pakistan,if that happens then USA/NATO troops will face the music in Afghanistan and in withdrawal “

    Though USA is the major contributor in the kitty of IMF these institutions are not their Zagir and IMF decides of their own. However Pakistan is not in a position to coerce US/NATO forces on the issue of withdrawal . Any such attempt will isolate it further . None of its so called friends will come forward for its rescue because of their own interest. Pakistan understands it( while Mr. Ahsan don’t)

    Recommend

More in Business