IDB chief due next week to sign $280m pact for agri sector

Updated April 26, 2019

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President of Islamic Development Bank Dr Bandar M. H. Hajjar
President of Islamic Development Bank Dr Bandar M. H. Hajjar

ISLAMABAD: Pakistan is expecting major support from China and Saudi Arabia in economic and agricultural cooperation over the next couple of days.

A senior government official told Dawn that four major agreements would be signed with China during the current visit of Prime Minister Imran Khan to Beijing while the President of Islamic Development Bank was due next week to sign around $280 million grant agreement.

Pakistan and China, he said, were set to sign a formal agreement for $1 billion grant assistance under which 27 short-listed social sector projects would be implemented in a phased manner.

The two sides would enter into a Free Trade Agreement-II under which Pakistan would be given preferential market access for a targeted $1bn export of selected products besides a formal agreement on Rashakai Special Industrial Zone (SEZ) in Khyber Pakhtunkhwa. The SEZ will be formally launched next month.

Agreement for $1bn Chinese grant for social sector projects to be formalised in Beijing

The official said the 4th agreement between China and Pakistan pertained to agricultural cooperation under which Punjab would be promoted as Foot and Mouth Disease-Free Zone.

Also, the government was anticipating about $545m assistance from multilateral agencies in the field of agriculture during the next fiscal year. In this connection, President of Islamic Development Bank (IsDB) Dr Bandar M.H. Hajjar will be visiting Islamabad on a three-day visit (May 2 to 4) to formally sign a grant agreement to support enhancing agricultural production using efficient irrigation system in Balochistan.

This will be in addition to a smaller grant assistance for feasibility studies of more than 50 small dams and ponds in Punjab to contribute to food security, increase farmers’ income and welfare of communities through development of mini dams command area with improved water use efficiency, reduce soil erosion and access to renewable energy on small scale.

About $100m loan is expected from the Asian Development Bank to enhance output and value-addition from Punjab Basmati Rice Value Chain next year. Likewise, the official said the World Bank was also interested in financing Irrigated Agriculture Improvement project in KP at an estimated cost of $165m.

The official explained that China had agreed to a request of the government to provide $1bn grant for socio-economic development and poverty reduction projects under the umbrella of the China-Pakistan Economic Corridor (CPEC).

Since the major cities already had the burn centres, relatively smaller placed have been identified like one in Hyderabad or Sukkur in Sindh, Bawalpur in Punjab and Dera Ismail Khan or Swat in KP. The centre for Balochistan will be developed in Quetta as patients with burn injuries were currently being transported to Karachi.

An expert group from China had later visited Pakistan in February and short-listed 27 short-term interventions which could be delivered in about a year even though the $1bn would be spent over a period of three years.

These initiatives would spread across all the four provinces and special regions — Azad Jammu & Kashmir and Gilgit-Baltistan — and would be funded by Chinese grant assistance in socio-economic cooperation. These poverty reduction initiatives were earlier part of the CPEC long-term plan.

The two sides have agreed to implement these 27 projects in the first phase which could be completed in the first year, particularly in areas where infrastructure was already in place. These include six burn centres in hospitals across the country — in four provinces and two special areas.

Besides health sector, other short listed projects for grant assistance related to areas of water supply, solar energy, education and fisheries and agriculture. The four provinces and AJK and GB had come up with more than 100 projects in various sectors but the two sides decided to focus on around two dozen with shortest possible gestation. Most of the projects would be cost $3m to $10m each, most to be provided by China International Development Cooperation Agency.

Published in Dawn, April 26th, 2019