ISLAMABAD, Nov 17: The international donor community has decided toinvest heavily both in occupied Kashmir and the Azad Jummu and Kashmir (AJK) following the gradual reduction in tension between India and Pakistan.

Sources said that major donors, especially the World Bank and the Asian Development Bank (ADB), believed that a return of tension was unlikely in the near future that encouraged them to invest in both parts of Kashmir.

As a first step, the ADB has decided to offer $76 million 'special funding' to Pakistan to help undertake a comprehensive programme for rehabilitating and reconstructing essential physical and social infrastructure in Azad Jammu and Kashmir.

However, the ADB wanted the government of Pakistan to ensure that there was no interference of the elected parliamentarians in the project and that issues concerning acquisition of land and resettlement be sorted out at the earliest so that a three-year project could be completed by Dec 2008.

The programme has been formulated on the basis of the package of urgent needs in health, education, water supply, roads and power sectors. It would bridge the investment gap, created over the past five decades.

Such investments together with the needed institutional strengthening of the related public agencies were expected to provide the basis for sustainable economic growth and help reduce poverty in the AJK.

The sources said that the federal government has last week approved $100 million "Proposed multi-sector rehabilitation and improvement project for the AJK" for which it would also contribute $24 million.

The donors believed that due to security problems and low-level investment in the social and physical infrastructure, the AJK lagged behind in development and suffered loss to infrastructure and displacement of people.

It has hampered the effective delivery of urban and rural services and considerably increased the poverty level in the AJK where 46 per cent of the population live below the poverty line.

The project, the sources said, would improve the living conditions and quality of life of about 3.4 million people in the AJK and would also benefit power, industry, fishery, housing, agriculture and irrigation sectors.

The ADB has sought undertaking from Pakistan that the AJK government would continue to accord priority to interventions aimed at poverty reduction and active community participation in the project. Also, the Bank wanted the government of Pakistan to ensure that adequate budgetary allocations of required counterpart funds would be made available and released in time.

Similarly, the Bank maintained that a satisfactory performance monitoring system should be established based on the key indicators and targets outlined in the project framework. The project would be reviewed by the project coordinator unit, planning and development division of the AJK and the ADB after every four months.