ISLAMABAD, May 4: A Rs29.6 billion loan approved by Japan under its official development assistance (ODA) will be used for development of rural areas in Sindh and Punjab and development of infrastructure and irrigation sector.

The Japan Bank for Inter-national Cooperation (JBIC) has now released details of the 47.943billion yen (Rs29.6 billion) ODA utilisation, an agreement for which was signed on Saturday.

“This assistance is based on the policy of the government of Japan, which values the importance of supporting the stable development of a country which aims to remain a moderate and modern Islamic state,” says the bank.

It says Pakistan has recorded strong growth in recent years with a GDP growth rate of seven per cent since 2002. However, about one-third of its population is still living below the poverty line, the bank says.

The Japanese assistance will support Pakistan’s efforts for achieving the Millennium Development Goals (MDGs), especially for poverty reduction and rural development.

According to the JBIC, the percentage of population living in poverty in rural Sindh was higher than the national average. Thus there is a need to accelerate economic growth and poverty reduction in rural Sindh.

The percentage of paved roads in rural Sindh connecting villages with major roads (national highways and provincial roads) or nearby cities and markets is very low and most of the roads are in poor condition, causing waste of time in movement of people and goods.

These factors are posing an obstacle to raising income in rural areas of Sindh. Some 9.126 billion yen (over Rs5billion) of the Japanese loan will be used for the rural road construction project-II in Sindh. The project aims at raising the income level of the rural population by improving access to education and health.

The official development assistance will also fund the Punjab Irrigation System Improvement Project.

The 11.3billion yen (over Rs6billion) project supports rehabilitation and up-gradation of irrigation systems and water resources management facilities, improvement in irrigation services and establishment and development of farmers’ organisations in the province.

According to the JBIC, Punjab produces the country’s 80 per cent wheat and cotton. The province needs more efficient use of water resources through stable supply of irrigation water and voluntary irrigation management by farmers’ organisations.In the power sector, 11.38 billion yen (around Rs7 billion) of the Japanese loan will support the Punjab Transmission Lines and Grid Stations Project-1.