South Asian reservoir — File Photo
File Photo of a South Asian reservoir — File Photo

WASHINGTON: The United States has agreed to provide $200 million for preliminary work on the Diamer-Bhasha dam project, says Finance Minister Hafeez Shaikh, who left for Pakistan on Thursday after a weeklong visit to the United States.

The power generation and water conservation project, which is likely to cost $10 billion, is expected to help the country overcome its energy shortages.

At a news conference at the Pakistan Embassy in Washington, the minister presented a rosy picture of the Pakistani economy, saying that in five years the present government had pulled the country back from the brink and put it on the road to stability.

Mr Shaikh disagreed with the suggestion that the production of electricity in Pakistan had decreased during the last five years but conceded that the country was not producing enough energy to meet its rapidly growing needs.

The minister acknowledged that investments in Pakistan had decreased and blamed the deteriorating security situation for this.

“There are causes for this situation that are beyond the government’s control,” he said.

Talking about his meetings in Washington, Mr Shaikh said the US also was funding repair work on four existing dams in Pakistan which would help boost electricity production by 900 megawatts.

The minister said the US would soon release $600 million to $500 million from the Coalition Support Fund, which was meant to reimburse Pakistan’s counter-insurgency operations but had been withheld for more than a year due to tensions between the two countries.

Mr Shaikh said that Washington also agreed to set up a task force to help Pakistan expand its access to the US market.

Commenting on a recent IMF report which warned that structural defects were “sapping the vigour out of the Pakistani economy”, the minister said the reports reflected the Fund’s “own point of view”.

IMF’s assessment that Pakistan’s economy would only grow by a little over 3 per cent was based on old data, while the latest data showed that it would grow at a rate of over 4 per cent, he said.

The minister said the IMF agreed with the assessment that Pakistan’s economy was capable of growing at a higher rate, “although their future forecast may have been a little different” than Islamabad’s.

Mr Shaikh said his team’s meetings with IMF officials had helped “align these variations… and we believe our growth rate can go up to 6 per cent in the next five years if we have political stability”.

He dismissed the impression that the Asian Development Bank had backed out of its commitment to finance the Diamer-Bhasha dam project. Not only the ADB but the United States also would finance feasibility study and surveys for the dam to be built in Gilgit-Baltistan, he said.

Pakistan would complete land survey, feasibility and land acquisition processes to expedite the process, the minister said.

Mr Shaikh, who was in Washington to attend the annual meeting of the US-Pakistan working group on economy, said Pakistan and the United States would soon launch a private investment initiative with seed money of $80 million.

“This will help spur economic activity, generate jobs and contribute to improvement in bilateral ties,” Dr Shaikh said.

The USAID administrator, Rajiv Shah, would soon visit Pakistan to review progress on the ongoing energy and infrastructure development projects, he said.

Recounting a series of positive macro-economic indicators, Mr Shaikh said the government’s reforms had boosted the country’s growth rate from under 2 per cent of the GDP five years ago to 3.7 per cent last year.

Exports brought an unprecedented $25.5 billion in the last fiscal year while tax revenue collection increased by 21 per cent.

The government also brought down inflation from a high of 25 per cent a few years ago to single digits, improved agrarian output and helped achieve a significant increase in foreign remittances.

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