Donors diverting funds from social sector to highway projects

ISLAMABAD: The ADB and DFID are making plans to divert $300 to $400 million resource envelop from neglected social sector to construction of roads and highways in Pakistan, The News has learnt.
According to official documents available with The News the Asian Development Bank (ADB) and UK based Department for International Development (DFID) are in the process of signing formal Memorandum of Understanding (MoU) for co-financing of road projects soon under which resources would be made available for roads construction by slashing down allocation for some other sectors in Pakistan.
“Both sides (ADB and DFID) are exploring options to establish delivery unit for hiring consultants and professionals with estimated annual salary of $500,000 per annum,” the document stated and added that the timelines for hiring individuals would be finalised by early March 2015.
DFID provides million of pounds in the shape of grants to Pakistan annually. Under Paris Declaration, the multilateral and bilateral creditors are bound to harmonise their priority areas in consultation with the recipient countries in order to avoid overlap but experts say that situation in Pakistan was moving from bad to worst where major chunk of donors’ money was going down the drain without achieving any results.
Similarly, ADB is also shifting its technical assistance (TA), which can be in the shape of both loans and grants for Punjab this year. ADB’s board is going to approve all roads projects by mid of 2015 which include Express 35 (from Hassanabdal to Havelian-Abbottabad and Manshera), N-50 highway running from city of D.I.Khan in Khyber-Pakhtunkhwa to the town of Kuchlak near Quetta via Zhob with total length of 531 km of which 143 km is in Khyber-Pakhtunkhwa and the remaining 388 km in Balochistan and N-70 highways covering Multan - D.G.Khan - Loralai - Qila Saifullah are already approved and approval of Motorway-4 (Faisalabad-Multan) is in the pipeline.
ADB plans to share the economic analysis of M-4 by end March and DFID is going to consider joining M-4 fact finding mission. The highway projects being financed by ADB and DFID will be completed in 24 months but the political pressure is forcing the donors to complete E-35 project in 18 months.
ADB had also discussed with Finance Minister Ishaq Dar Islamic commercial financing Sukuk but DFID grant could leverage commercial financing. The experts say that DFID is facing pressure in the UK to refrain from funding such projects in countries like Pakistan where their taxpayers’ money goes waste.
The department is now finding ways to come up with returnable capital instruments as money will be provided as Qarz-e-Hasna under which no markup will be charged but Islamabad will have to repay the amount.
When top officials in Economic Affairs Division (EAD) were contacted on Wednesday, they said that the social sector was shifted to provinces in accordance with the 18th Constitutional amendments so the provinces were largely looking after the education and health sectors.
While quoting ADB’s country director, the official said that ADB was going to provide major share of its funding for energy sector while remaining portfolio consists of transport (16%), agriculture and natural resources (13%), multi-sector (emergency project, 11%), health and social protection (7%), and water and other urban infrastructure and services (2%).
They said that they were busy reviewing portfolio of all donors and they were not aware of any such development where money would be transferred from social to any other sector.