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ADB approves $350m agriculture loan

December 14, 2001

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ISLAMABAD, Dec 13: The Asian Development Bank (ADB) has approved US$350 million soft loan for the development of five-year agriculture sector programme in Pakistan.

The first tranche of $125 million will be disbursed after taking compliance measures.

According to an announcement made by the local ADB office here on Thursday, the primary objective of the “Agriculture Sector Programme Loan” will be to improve agriculture productivity and profitability.

It included special reform measures to promote efficient markets for major commodities including wheat, cotton, rice sugar, fertilizer, and seed. The purpose is also to strengthen support services in small farmer extension and training, research and regulation, to improve quality.

The programme will promote pro-poor reforms to expand the role of the private sector through deregulation, liberalization, and privatization affecting many public input, supply, and output marketing enterprises that now operate in the agriculture sector. The resultant sectoral efficiency would minimize, and eventually eliminate the drag on the country’s fiscal resources.

A technical assistance loan will also be provided to assist the government in policy advice, programme coordination, improving efficiency of commodity markets, small farmer extension, research and safety nets, and reorganization and restructuring of relevant state-owned enterprises.

While the ADB has approved a major agriculture loan programme, a number of its ongoing development projects with a cost of $450 million in Sindh are experiencing delays in the implementation due to unfamiliarity with the Bank’s procedures.

The officials of the Bank have said that the delay was also caused due to government’s approval formalities and decisions on procurement matters. The Bank wanted to streamline various procedures so that unnecessary delays in completing ongoing development projects in Sindh could be avoided.

For this purpose the ADB was organizing workshops to familiarize the project directors/project mangers and relevant government officials with its guidelines and procedures on project management and related matters.

The concerned resource persons of the Bank will deliberate on the important aspects of project implementation, covering specifically, ADB project cycle, guidelines on procurement, guidelines on consultant selection, disbursement procedures, and financial management matters.

The ADB portfolio in Sindh consists of 15 loans, comprising three in agriculture and rural development sector, two in physical infrastructure, two in energy sector, seven in social infrastructure and one emergency assistance for drought.

The ADB will hold similar workshops in the NWFP and Balochistan during the later part of December 2001. The Bank held similar workshop in Lahore and Karachi last month.

According to the ADB Annual Report for 2000, although Pakistan has a good disbursement record, project implementation continued to be delayed. The government and the ADB agreed on comprehensive action plan - updated at each country portfolio review - that addresses policy and governance-related covenants in loan agreements. Difficulties in complying with covenants were attributed to lack of ownership, an unclear definition of responsibilities, inadequate follow up, and resource and capacity constraints. As a result of slowed project implementation, some loan-closing dates had to be extended.

Since joining the ADB in 1966, Pakistan has received 192 loans, which included 20 private-sector loans without government guarantee, of which 51 were active at the end of 2000, bringing the cumulative loan figure to $7.5 billion.