ISLAMABAD, April 19: The Islamic Development Bank (IDB) will offer soft loans to help undertake infrastructure and road projects, Finance Minister Shaukat Aziz said here on Saturday.
Speaking at a joint news conference along with IDB President Dr Ahmad Muhammad Ali, the minister said the IDB had agreed to offer soft term lending for the construction of road linking Gwadar to Central Asia.
In the first phase, Mr Aziz said, Gwadar would be connected to Turkmenistan, Uzbekistan and Tajikistan via Afghanistan. Also, he said, the IDB had agreed to provide funding for the construction of road from Peshawar to Torkhum.
He said Pakistan was already providing $100 million for various development activities in Afghanistan, including for the construction of Jalalabad-Kabul road. “We hope to receive 80 per cent soft loaning from the IDB for the development of Gwadar to Chaman road,” he added.
The finance minister said the IDB had agreed to shift the focus of its assistance from trade financing to the development projects. He said the IBD had kept $350 million trade financing which had so far been used to the extent of $100 million.
The IDB president told reporters that he had initially agreed to offer considerable new soft loaning for the development of infrastructure projects. “Our Board is meeting tomorrow (Sunday) in Jeddah to formally approve the funding for the development projects in Pakistan,” he said.
Dr Ahmad said the IDB loans carried 1.5 per cent mark-up plus London Inter-Bank Offered Rate (LIBOR). He did not agree to a query that his bank was charging interest rate more than other foreign banks and investment companies.
In the first place, he said, the IDB did not charge any interest rate and asked for service charges along with a reasonable rate of mark-up.
He said the IDB also planned to extend loaning for the reconstruction of Iraq, and in this behalf humanitarian assistance would be extended on priority basis.
Responding to a question, the finance minister said the businessmen of Pakistan, Iran and Turkey would be given preference by the IDB to take part in the development activities inside Iraq. Similarly, Mr Aziz said the IDB was planning to offer assistance for repair and restoration work in Afghanistan, which would be undertaken by Pakistani and Islamic countries’ businessmen.
To another question, he said Pakistan now did not need trade financing from the IDB for the import of crude oil and palm oil due to accumulation of better foreign exchange reserves. But he said the IBD assistance would be diverted to the development projects and education.
Dr Ahmad told a reporter the IDB was already providing funds to the National University of Science and Technology (NUST) and the Ghulam Ishaq Institute.
