ISLAMABAD, June 27: The Asian Development Bank on Wednesday announced to provide $400 million in soft loans to Pakistan to rebuild homes hit by the 2005 earthquake.
The loan, approved by the ADB’s board of directors in Manila, is part of a $1 billion pledge the bank had made after the 7.6 magnitude quake on Oct 8, 2005, which killed at least 80,000 people. The loan would be a new initiative to house some 30,000 people still living in tents and 3.5 million others in non-permanent dwellings, an ADB announcement said.
The loan carries an interest rate of 1 per cent per year and a maturity of 40 years, including a grace period of 10 years.
“With the last two winters having been extremely harsh, ADB is fully supportive of the government’s push to make the upcoming winter the last one without proper homes for most of those displaced by the quake,” said C.C. Yu, the Asian Development Bank Mission Leader. “We are moving this forward as fast as possible.”
The injection of funds will be a boost for the region’s economy. It will create jobs for reconstruction workers and help businesses supplying reconstruction materials.
In addition to the new loan, the Asian Development Bank will provide a $2 million grant to increase the capacity of Pakistani institutions helping to rebuild quake-affected areas. It will provide training in seismic construction, strengthen financial and strategic management and support environmental and social protection.
The loan will be released in two parts. The first tranche of $200 million will provide support on a retroactive basis for significant housing expenditures already incurred by the government. The second tranche, expected to be released within six months of the first, will be used to meet additional financing needs of the housing reconstruction programme.
Home owners will be given money directly to repair or rebuild their own homes in accordance with approved designs to make them more resilient to earthquakes in the future.
People whose homes have been completely destroyed will receive Rs175,000 (about $2,900) in four instalments. For a partially damaged house, the owner will receive Rs75,000 (about $1,230) and for houses with minor damage, Rs25,000 (about $410). The payments will be made on the basis of progress reports from field inspections by appraisal teams with representation from the local government, communities, army and non-government organisations.
An extra Rs75,000 will be provided to about 6,000 households, whose land was destroyed by quake-triggered landslides, to acquire new land to rebuild their homes.
The new loan is the latest in a long list of funding the ADB has provided toward the reconstruction effort. Within three months of the quake striking, the Asian Development Bank had approved $405 million. This was followed by a $5 million grant, $12.5 million increase in financing and $62.5 million reallocation of loan savings from other projects. In addition, the ADB has helped mobilise about $97 million in additional grant funding.
