Pakistan to Get $5.965 Billion in Loans From ADB in Three Years

The Asian Development Bank (ADB) will give $5.965 billion loans to Pakistan under the country operations business plan (2017–2019) during next three years, it is learned.

According to the ADB updated plan, the proposed sovereign lending program for 2017–2019 amounts to $5.965 billion, consisting of $4.765 billion from regular ordinary capital resources (OCR) lending and $1.2 billion from concessional OCR lending.

This includes about 29% over-programming to respond to operational adjustments. In addition to stand-alone projects, the sovereign lending program comprises two policy-based programs and seven multi-tranche financing facilities (MFFs).

According to ADB, Pakistan, a group B developing member country, is eligible for regular ordinary capital resources (OCR) lending and for concessional OCR lending (COL).

The indicative resources available during 2017–2019 for ADB’s sovereign operations amount to $4,623.6 million in loans, comprising $3,240 million in regular OCR lending operations and $1,383.6 million from COL.

The final allocation will depend on available resources and the outcome of the country performance assessments.

These resources will be supplemented with ADB’s non-sovereign operations, subject to headroom constraints, as well as official and commercial co-financing.

Co-financing and funding from other sources, including the regional pool set-aside under regular OCR and COL for regional cooperation and integration, will be explored.

The indicative non-lending technical assistance program for 2017 amounts to $12.2 million, including $7.0 million from other sources. ADB will endeavor to seek additional sources of financing, including co-financing, regional set-aside, and non-sovereign funding (if applicable) to process projects beyond the stipulated resource envelope.

The cost-sharing and financing parameters during 2017–2019 envisage a ceiling of 85% for the loan portfolio and 90% for the technical assistance portfolio, similar to current limits. Actual shares for specific ADB projects will be determined by project-specific considerations and available co-financing.

Energy

ADB’s resource allocation has increased for energy sector from previous $1.65 billion to $1.90 billion. A new $1.0 billion MFF, the Hydropower Development Investment Program, which focuses on clean energy and hydropower generation, was added.

Transport

ADB’s resource allocation has increased for transport from previous $757 million to $1.61 billion. Two stand-alone projects were added for 2017 and 2018 to support rehabilitation of selected national and provincial highways.

Two bus rapid transit projects will focus on improved public transport in the cities of Peshawar and Karachi. Potential assistance for Lahore will also be explored further

These investments will complement programmed ADB assistance for improved efficiency of selected Central Asia Regional Economic Cooperation road and rail corridors in Pakistan.

Agriculture, natural resources and rural development:

ADB’s resource allocation has increased from previous $305 million to $455 million for agriculture, natural resources and rural development.

Improving agriculture productivity through water resource infrastructure development and management, irrigation system rehabilitation, and command areas development remains a key area of the proposed lending program.

In this regard, the country operations business plan, 2017–2019 includes three projects in the provinces of Balochistan, Punjab, and Khyber Pakhtunkhwa, with additional cofinancing from other development partners.

Under knowledge products, ADB will assist in preparing a climate risk vulnerability assessment for Federally Administrated Tribal Areas water resources.

Water and other urban infrastructure and services

ADB’s resource allocation for water and other urban infrastructure and services has increased from previous $310 million to $600 million.

ADB is processing an MFF to provide assistance for improved quality of urban services for residents of selected cities in Punjab province in 2017.

Subsequently, urban development projects are envisaged in Khyber Pakhtunkhwa and Sindh provinces to improve service delivery either through stand-alone projects or on MFF basis.

Public sector management

ADB’s resource allocation has decreased from previous $600 million to $500 million for Public sector management.

ADB will support government reforms of public sector enterprises (especially in core infrastructure sectors), the establishment of mechanisms for project development, and viability gap funding.

A Public Sector Enterprises Reform Program ($300 million, Subprogram 2, 2017) will continue to help implementation of reform and restructuring of selected public sector enterprises.

The Enhancing Public–Private Partnerships for Punjab, with co-financing from the Department for International Development of the United Kingdom, will focus on capacity and institutional development for public–private partnerships.

Finance

ADB’s resource allocation has increased from previous $290 million to $900 million for Finance. To support long-term financing for infrastructure projects in Pakistan, an investment project is planned for the Pakistan Infrastructure Development Fund in 2017, followed by an MFF in 2019. Moreover, a $200 million Pakistan National Disaster Risk Management Fund was approved in November 2016 to help capitalize the fund and start its operations.

A subsequent investment through an MFF will support fund activities in 2018 and beyond. The fund focuses on enhancing Pakistan’s resilience to climatic and other natural hazards as well as strengthening the government’s ability to respond to natural disasters more effectively.

According to the Bank, the country operations business plan, 2017–2019 for Pakistan is aligned with ADB’s country partnership strategy, 2015–2019 for Pakistan.

The country partnership strategy proposes to support the government’s objective of high, sustained, and inclusive growth, focusing on infrastructure development and institutional reforms.

The country operations business plan, 2017–2019 is also consistent with the priorities set out in ADB’s Midterm Review of Strategy 2020. It is aligned with the government’s development strategy, Vision 2025, and the development strategies and plans of provincial governments, the Bank maintained.


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