ADB Extends Country Operation Business Plan With Pakistan But Cuts Resources

The Asian Development Bank (ADB) has extended its current Country Operation Business Plan (COBP) for Pakistan to 2020-2022 but slashed resource allocation for energy sector from $2.245 billion to $1.67 billion, Public Sector Management from $1.2 billion to $300 million and education sector from $175 million to $100 million.

The ADB has updated its website according to which the COBP 2020-22 for Pakistan is aligned with ADB’s country partnership strategy for Pakistan 2015-19, which supports the government of Pakistan’s objective of sustained and inclusive economic growth.

The indicative resources available for commitment during 2020–2022 for sovereign operations total at $5.7 billion, comprising $4.3 billion for regular ordinary capital resources (OCR) lending and $1.4 billion for concessional OCR lending (COL). The final allocation will depend on available resources, project readiness, and the outcome of the country performance assessments. Co-financing and funding from other sources, including the regional pool under concessional resources, will be explored.

The proposed sovereign lending program for 2020–2022 amounts to $7.1 billion, comprising $5.6 billion from regular OCR lending and $1.5 billion from COL (this includes about 25% over-programming to respond to possible operational adjustments). The non-lending program for 2020–2022 is $22.0 million inclusive of ADB and other sources, the majority of which are transaction TAs for several pipeline projects.

The ADB’s resource allocation has decreased from $2.245 billion to $1.670 billion for the energy sector, while co-financing has increased from $290 million to $450 million. A new hydropower project is added to the 2020 pipeline.

To supplement the government’s energy reform agenda, the pipeline includes policy-based loans, results-based loans, and MFFs.

These projects will;

  1. Strengthen energy infrastructure, particularly in transmission, distribution, and gas
  2. Increase the supply of affordable indigenous energy
  3. Provide capacity development support. The fourth tranche of the MFF for power transmission investment program has slipped from 2019 to 2020 and a new project for 2020 is included (Balakot Hydropower Development in Khyber Pakhtunkhwa province).

The ADB’s resource allocation has increased from $1.394 billion to $1.500 billion for the transport sector, while co-financing has increased from $100 million to $250 million. New projects added will focus on provincial and rural road development. The national highway project from 2019 pipeline is now firm in 2021 and new projects for 2022 will focus on provincial and rural road development.

For the public sector management, the ADB’s resource allocation has decreased from $1.2 billion to $300 million for 2020-2022. New projects include support for PPPs in Sindh and Punjab and policy-based loans for financial sector reforms. The government has also requested urgent ADB assistance under the special policy-based lending (SPBL) modality amounting to $1.0 billion and additional financing of $200 million for the Benazir Income Support Program, which are to be processed in 2019.

The resource allocation for the education sector has decreased from $175 million to $100 million. The ADB’s resource allocation has increased from $470 million to $700 million, while co-financing has increased from $300 million to $550 million for water and other urban infrastructure and services.

For the agriculture sector, the ADB’s resource allocation has increased from $794 million to $980 million, while co-financing has increased from $530 million to $760 million. The ADB’s resource allocation has increased from $50 million to $100 million for health sector.

The Country Operation Business Plan comprises project loans; policy-based lending for structural reforms; multi-tranche financing facilities (MFFs) for energy, transport, water and other urban infrastructure and services; and results-based lending for energy and social services.

The pipeline includes two new modalities:

  1. Project readiness financing (PRF) for efficient design and delivery of projects in agriculture and urban services,
  2. A small expenditure financing facility (SEFF) for provincial cross-sectoral development.

The ADB aims to mobilize private financing for development projects and expanding its own financing and technical assistance (TA) for public-private partnerships (PPPs). The ADB will also explore the policy-based guarantee (PBG) to support the government to leverage more financing and support capital market development.



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