ISLAMABAD, Sept 30: The World Bank (WB) and the Asian Development Bank (ADB) have agreed to offer substantial financial assistance for rehabilitating the crumbling infrastructure of bigger cities in Pakistan, it is learnt.

Informed sources told Dawn here on Friday that as a first step, the ADB would provide special $215 million funding to rejuvenate degenerating infrastructure of Karachi.

However, the government was told that the new funding would ‘not’ be available to it in 2005 and that the bank would oblige Pakistan over the issue in 2006.

Earlier the bank had agreed to provide $100 million for mega city project in Karachi. However, when the government asked for an increased funding of $215 million, it was asked to wait for formal approval by the board of directors of the ADB till 2006.

The sources said that since a recent visit of the ADB president to Pakistan, the government had been expecting additional financial assistance for many new development projects.

In this behalf, the government was also told that the ADB would initially provide $10 million technical assistance for Karachi during 2005.

“Since the WB has agreed to provide sizable funding for infrastructure development in Lahore, the ADB has decided to offer maximum financial assistance for improvement of roads, government buildings and other important areas and sites in Karachi”, a source said.

The government was told that as soon as elections of different nazims were over in Karachi, the ADB would start evolving its strategy to support the mega city project.

As a follow-up to the visit of the ADB president, the sources said, the government was finalizing details of the projects that required the bank’s assistance during the next three years. The bank planned to offer about $3 billion to Pakistan for these projects.

“Time has come to negotiate new loans and seek their approval,” a source said adding that since Pakistan was not seeking any new loan from the IMF, the ADB had expressed its willingness to extend loans on reduced mark-up besides usual grants.

The sources said the ADB had also indicated to offer new funding for developing small and medium enterprises (SMEs) in 2006. The government was told that the bank fully supported Pakistan’s focus on SMEs development and would continue to provide necessary assistance for growth and development of this sector.

The ADB is helping to promote economic growth through development of SME sector and had earlier approved $170 million.

Nevertheless, the sources said that bank believed that poverty in Pakistan was a major problem, with an estimated one-third of the population living below the poverty line. Poverty is especially common in rural areas with an estimated 70 per cent of the poor living in its rural areas.