ISLAMABAD, Feb 26: The Asian Development Bank will provide $500million to Pakistan ahead of the next budget and has expressed willingness to double its annual assistance to $3billion as requested by the country.
A team of ADB officials met Prime Minister Yousuf Raza Gilani and Minister of State for Finance Hina Rabbani Khar on Thursday.
The bank’s Vice President Xiaoyu Zhao said at a press conference that the bank was ready to offer finances for major power projects including the Diamer-Bhasha dam. The dam’s cost is estimated to be around $12.6 billion.
The ADB provided a budgetary support of $500million in September 2008 – the first quarter of the current financial year.
“We are ready to substantially increase and even double our support for Pakistan,” Mr Zhao said.
The ADB’s country assistance programme for Pakistan is of around $1.5billion and can be doubled if Pakistan makes a request.
The ADB vice president said the bank had planned to provide guarantee facility to private sector commercial banks in the region for trade financing and guarantee of the letters of credit. He said Pakistan could avail itself of the facility also for trade financing.
The bank has also offered guarantee for issuing bonds in the international equity and capital market.
The International Monetary Fund (IMF) said on Wednesday Pakistan’s Gross Domestic Product (GDP) would grow by 2.5 per cent only instead of 3.5 per cent because of a steep decline in industrial growth this year.
Ms Hina Rabbani Khar, however, said that despite considerable decline in industrial output this year, the agriculture sector was robust and inflation and trade deficit were declining which were positive signs. She said the economic growth had slowed down considerably because of global recession as well as domestic pressures.
Ms Khar explained the government’s nine-point economic reform agenda which would cover social protection, agriculture, industrial competitiveness, human resource development, energy, capital market, public-private partnership and administrative reforms.
Mr Zhao said the ABD supported the agenda and hoped that the country’s economy would improve.
Ms Khar said the government was actively working on public-private partnership mechanism, its legislation and the leadership to implement the initiative.
She said the government was also focussing on improving the Small and Medium Enterprises (SME) sector.
She said the government was committed to reducing the number of projects to a manageable level for optimising the impact and implementing projects economically, effectively and efficiently.
Mr Zhao said the ADB team headed by him had also visited Punjab and the bank was trying to improve its development programme for Pakistan through better implementation of projects.
Earlier, Mr Zhao met Prime Minister Yousuf Raza Gillani who appreciated ADB’s support for Pakistan and expressed the hope that the cooperation would continue to help overcome the shortage of energy, water and food through construction of dams and related projects.