ADB announces $7.5bn business plan for Pakistan

The ADB has allocated $2,400 million as loan for the finance and public sector management sectors, which makes up 31.9 percent of the total pipeline. (AFP/photo)
Updated 14 December 2018

ADB announces $7.5bn business plan for Pakistan

  • Allocates $2.3bn loan for the energy sector
  • Funds to help Islamabad work toward eradicating extreme poverty, financial experts say

KARACHI: The Asian Development Bank (ADB) on Friday announced plans to set aside $7.5 billion for Pakistan, a move which financial experts say would help Islamabad in its fight against extreme poverty.
The initiative is part of ADB’s Country Operations Business Plan (COBP) 2019-2021.
The indicative resources available during 2019–2021 for sovereign operations amount to $5,712.1 million, comprising $4,290.0 million for regular Ordinary Capital Resources (OCR) lending, while $1,422.1 million is for Concessional OCR Lending (COL), the ADB said on Thursday.
The proposed sovereign lending program for 2019–2021 is $7,528 million, consisting of $5,370 million from regular OCR lending and $2,158 million from COL which includes a carryover of $600 million from 2018.
The non-lending program for 2019–2021 is $21.7 million, including a transaction technical assistance for various pipeline projects — according to the COBP 2019-2021 plan — which is aligned with the Asian lender’s country partnership strategy and the government’s development strategy named “Pakistan Vision 2025”.
Energy, transport, agriculture, water, urban infrastructure and services, finance and public sector management are the priority sectors for the lending program during the three-year period.
The ADB has allocated a $2,245 million loan for the energy sector, which is 29.8 percent of the total pipeline for 2019–2021.
“The pipeline includes a multi-tranche financing facility for Transmission Strengthening (tranche 1) for the National Transmission and Dispatch Company (NTDC), Hydropower Development Project for the Water and Power Development Authority (WAPDA), and support for the Turkmenistan-Afghanistan-Pakistan-India Gas Pipeline project,” the COBP document states.
The ADB’s loan financing of $1,394 million — or 18.5 percent of the total pipeline — is allocated for the transport sector.
The pipeline includes the Sustainable National Highway project and the Sindh Hyderabad Southern Bypass project. The bank has also proposed support for the revitalization of Pakistan Railways to improve the transport sector’s sustainability, including exploring nonconventional financing arrangements, according to the document.
The Asian lender has allocated $794 million in loan financing — which is 10.6 percent of the total pipeline — for the agricultural sector, natural resources, and rural development.
The pipeline includes the Greater Thal Canal Irrigation project, the Kurram Tangi Water Resources project, and the Smaller Cholistan Water Resources Development project.
A Loan financing of $470 million has been allocated to the sector — or 6.2 percent of the total pipeline — for water and other urban infrastructure and services. The pipeline includes a cross-sector project readiness facility for Punjab and the Punjab Cities Improvement project.
The ADB has allocated $2,400 million as loan for the finance and public sector management sectors, which makes up 31.9 percent of the total pipeline.
The education and health sectors pipeline includes $225 million in loan financing, or three percent of the total pipeline. ADB’s reengagement in the education and health sectors includes $175 million for projects focussing on the secondary education in Sindh and improving workforce readiness and skill development in Punjab, as well as a $50 million project to improve the quality of health care services in the Khyber Pakhtunkhwa province, according to the document.
The bank will also provide technical assistance to all sectors during the implementation phase and to generate and disseminate knowledge to support policy and project development, as well as to enhance project quality and readiness.
The new projects include a Trade and Competitiveness Program in 2019, Financial Markets Development in 2020, Infrastructure Financing and PPPs in 2021; as well as the second phase of Support for the Benazir Income Support Program in 2020.
The Asian lender has committed country financing at a time when Islamabad is looking toward various sources of funding including seeking help from its allies and the International monetary Fund (IMF).
Economists termed the move as a timely step taken by the ADB to support Pakistan in its efforts to eradicate extreme poverty.
“This is a very encouraging development as Pakistan is in a dire need of funds from institutions like the ADP and the WB (World Bank). The long-term project loans improve infrastructure and social development to achieve the development goals. Pakistan is lagging behind in almost all areas covered in the Millennium Development Goals. This funds from ADB will help to catch up and eradicate extreme poverty,” Dr. Ikram ul Haq, a senior economist and an expert on taxation matters, told Arab News.
The funds pledged by the Asian lender are important because all the sectors need financial support. “All the eight sectors need massive funding to strengthen their operations in the country,” Professor Dr. Athar Ahmed, a senior economist, said.
“We should say goodbye to the IMF,” Dr. Ahmed suggested, adding that “for the next five years, our institutions will be on a sound footing and become self-reliant because the ADB funding will have a profound impact on the health of local institutions”.
The Manila-based lending agency says it is negotiating with Islamabad as the new government is in the process of establishing its development priorities.


Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

Updated 27 November 2020

Japan’s capital sees prices fall most in over 8 years as COVID-19 pain persists

  • Tokyo core CPI marks biggest annual drop since May 2012
  • Data suggests nationwide consumer prices to stay weak

TOKYO: Core consumer prices in Tokyo suffered their biggest annual drop in more than eight years, data showed on Friday, an indication the hit to consumption from the coronavirus crisis continued to heap deflationary pressure on the economy.
The data, which is considered a leading indicator of nationwide price trends, reinforces market expectations that inflation will remain distant from the Bank of Japan’s 2% target for the foreseeable future.
“Consumer prices will continue to hover on a weak note as any economic recovery will be moderate,” said Dai-ichi Life Research Institute, which expects nationwide core consumer prices to fall 0.5% in the fiscal year ending March 2021.
The core consumer price index (CPI) for Japan’s capital, which includes oil products but excludes fresh food prices, fell 0.7% in November from a year earlier, government data showed, matching a median market forecast.
It followed a 0.5% drop in October and marked the biggest annual drop since May 2012, underscoring the challenge policymakers face in battling headwinds to growth from COVID-19.
The slump in fuel costs and the impact of a government campaign offering discounts to domestic travel weighed on Tokyo consumer prices, the data showed.
Japan’s economy expanded in July-September from a record post-war slump in the second quarter, when lockdown measures to prevent the spread of the virus cooled consumption and paralyzed business activity.
Analysts, however, expect any recovery to be modest with a resurgence in global and domestic infections clouding the outlook, keeping pressure on policymakers to maintain or even ramp up stimulus.