ISLAMABAD, Nov 15: The government is thinking of re-allocating and re-prioritizing its expenditures to partially share the estimated $5.2 billion reconstruction cost. “Although we are expecting substantial funding from international donors at the November 19 conference, we may re-allocate and re-prioritize our expenditures during 2005-06 and beyond,” said Prime Minister’s Adviser on Finance Dr Salman Shah.
He told Dawn that the World Bank had given its assessment about the state of the economy, including the lowering of GDP growth target from 7 per cent to 6.2 per cent.
He claimed that since most of the damage was done in Azad Kashmir and the country’s northern areas, where there were no big agricultural and manufacturing industries, the government would hopefully manage without having to lower its various budgetary targets.
Dr Shah said that the government was expecting increasing amount of grants and soft loans from international donor agencies and Pakistan’s bilateral creditors to adequately meet the reconstruction and rehabilitation cost.
He said so far funding worth $1billion had been committed by the international community in the shape of pure grants.
He further said: “But I really cannot say whether $2.5 billion or $3 billion or more than that will be granted out of $5.2 billion assessment but we are being given to understand that sizable assistance will be in the form of grants on return basis.”
Dr Shah said that financial assistance offered by Saudi Arabia, the United Arab Emirates, Turkey and some other countries was a total grant for helping quake victims and starting reconstruction work.
Responding to a question, he said that foreign funding to be pledged by the donors in the shape of soft loans carrying about 0.5 per cent interest rate would be for 40 years and as such it would not be a problem for Pakistan to repay it.
To another question, he said that the World Bank had lowered the GDP growth forecast on the basis of downwardly revised cotton production. But the good thing, he added, was that international cotton prices had increased which would offset the difference and as such the government would be in a position to manage its growth rate during the current financial year.
The advisor on finance said that donor agencies, bilateral supporters as well as the foreign corporate sector were assuring to sponsor houses, schools and hospitals which would further help in removing the government’s financial difficulties being faced in the wake of the October 8 earthquake.
To another question, he said International Financial Institutions did not have enough provisions for offering generous grants but they were willing to extend soft loans on reduced mark-up and for a longer period of time.
Asked about transparency, the advisor on finance said that there would be a thorough audit of everything and there was no question of allowing anyone to misuse funds.
