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July 7, 2017

ADB to give $7.5 bn loan to complement CPEC


July 7, 2017

ISLAMABAD: The Asian Development Bank (ADB) plans to provide $6 to $7.5 billion loans to Pakistan over next three years (2018 to 2020) under medium strategy, mainly for urban development, construction of subsidiary railway line along with Mainline (ML-1) and bringing efficiency in public sector enterprises, the visiting ADB Vice President Wencai Zhang said on Thursday.

“The ADB is interested to compliment China Pakistan Economic Corridor (CPEC) and other regional connectivity projects connecting South Asia with central Asia and other parts of the world.

For making corridors effective, the urban planning and meeting requirements of water and sanitation are important aspects to be focused upon for development,” Zhang said while briefing reporters here at Bank’s office. In order to bring reforms into cash bleeding public sector enterprises, the government has agreed with the ADB for inclusion of one female representative into Board of Governors of PSEs for bringing improvement and efficiency of these entities. 

Flanked by ADB’s Advisor Werner Liepach and the Bank’s Country Director Ms Xiaohong Yang, the visiting vice president did not reply questions related to increasing political instability which might pave the way for wasting macroeconomic gains earned by the country in the last four years. To another query about possibility for seeking another IMF package, he said that he could not pre-judge the decision and added that they would support the country for undertaking reforms in years ahead.

On the issue of Country Partnership Strategy (CPS), he said that the CPS for 2015-19 was underway and they were passing through the midway of this strategy. “Now we are finalizing three year strategy for 2018 to 2020 for which the government requested the ADB to jack up assistance on annual basis,” he added.  For the current year 2017, he said that the ADB could disburse at least $1.8 billion and chances were bright that it could be gone up to $2 billion. “For next three years, the annual assistance will be hovering around $2 to $2.5 billion so overall $6 to $7.5 billion will be provided to Pakistan depending upon readiness of the projects,” he added. To another query regarding commitment charges payment of millions of dollars being paid by Pakistan because of non implementation on signed projects, he said that both sides would have to streamline internal procedures as the ADB made certain changes to avoid approving of projects which were not ready for implementation.

He also said that China took decision to finance Pakistan’s Railway line Mainline (ML-1 (Peshawar to Karachi) unilaterally after which the ADB decided to undertake other projects of railways as now the ADB would finance construction of subsidiary line along with ML-1.

“The financing of subsidiary line has not yet been firmed up,” he said and added that the Bank would also support Islamabad for bringing reforms at energy sector.  The ADB’s Advisor Werner Liepach said on the occasion that the Bank would extend support for clean energy in Pakistan in areas of solar and wind projects. The ADB, he said, did not think that solar energy projects would become dead in Pakistan as they intended to do more in future.

To another query regarding any improvement achieved so far by PSEs, Mr. Werner Liepach replied that power distribution companies (DISCOs) took up pension liabilities under ADB’s supported reforms for energy sector. He said that the ADB had not supported PIA and Pakistan Steel Mills (PSM) and they would focus on bringing improvement in Pakistan Railways.

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