In a setback, ADB has refused to finance projects being executed in Pakistan under the banner of CPEC.
The Asian Development Bank (ADB) said that it would not finance CPEC projects, saying that the bank is an international financial institution and since the CPEC is a bilateral initiative, ADB cannot become part of it. This was communicated by Tomoyuki Kimura, Director-General for ADB Strategy, Policy and Review Department while speaking to journalists.
The lending agency also linked its budgetary support to a good economic health certificate from the International Monetary Fund (IMF).
However, the ADB official said that the bank was ready to support regional initiatives like the Belt and Road Initiative (BRI), also a brainchild of the Chinese president. If the bank finds common objectives in any regional project including the BRI, it will extend financing.
ADB’s country director Yang maintained that there were common objectives between CPEC and Central Asia Regional Economic Cooperation (CAREC).
She called for linking economic corridors and other regional initiatives. Yang further urged Pakistan to be watchful in handling the mega mainline-I project of the CPEC, which has an estimated cost of $8.2 billion.
“The ML-I is a very expensive mega project and the government needs to explore all possible ways to make sure that the project is financially sustainable,” said the country director.
She also mentioned that ADB was aiding Pakistan in reviving Pakistan Railways.
The ADB and the World Bank suspended Pakistan’s budgetary support due to deterioration in macroeconomic conditions. Yang shared that all the donors came together on the issue of economic stabilization policies that are to be implemented by Pakistan and it was not only about the IMF.
For the next three years, the Manila-based lender has proposed to provide $2.4 billion for budgetary support to Pakistan. The DG backed the Pakistan Tehreek-e-Insaf (PTI) government’s stance on the privatization of loss-making power distribution companies.
A long time ago, the donors pushed the privatization policies but the ADB is now taking a different approach on this issue, said Kimura. Sometimes privatization can be good but often it is very difficult to privatize loss-making enterprises due to their financial conditions. The official said that the discos need to be made financially viable before they are privatized.
She further highlighted that the ADB was working on an integrated energy policy to address Pakistan’s energy sector problems. A timeline is also being developed to address the issue of circular debt in the power sector.