ISLAMABAD -  Pakistan would receive $623 million loan from Asian Development Bank (ADB), World Bank (WB) and the Agence Francaise de Development (AFD) in next few days.

The loans would help Pakistan in building foreign exchange reserves, which had come down to $20.2 billion. The World Bank approved a package of $223 million to help millions of Pakistanis, especially women and the poor, to get access to financial services and to improve living conditions in parts of Karachi. Meanwhile, the ADB and the AFD have approved over $400 million in loans to support Pakistan’s efforts to provide a more reliable and secure energy sector. The $300 million in ADB assistance, the third such loan under the Sustainable Energy Sector Reform programme, brings the bank’s total financing to $1 billion since 2014. AFD will add €100 million in co-financing.

ADB Country Director Xiaohong Yang and Economic Affairs Division (EAD) Secretary Tariq Mahmood Pasha signed the ADB loan agreement. Finance Minister Ishaq Dar witnessed the agreement signing ceremony held in Islamabad on Friday. “Pakistan’s ambitious energy reform programme demonstrates the government’s commitment to improve the reliability, sustainability, and affordability of the energy sector,” said Yang. “Maintaining the momentum for reform will help ensure that all Pakistanis have access to electricity, while keeping the economy on an inclusive, sustained growth path,” she added.

Under the programme, Pakistan has embarked on a substantial reform initiative that will reduce energy subsidies and adjust tariff policy, improve sector performance and open the market to private participation, and increase accountability and transparency. The reform measures aim to address financial viability and reduce costs to taxpayers. Specific measures include recently agreed legislation that will improve governance through more clearly defined roles for both the government and the energy sector regulator, and reduce debt levels in the energy sector.

“As co-financing partner in the reforms project, AFD is committed to promoting green energies in Pakistan through investments in low-carbon-emission energy generation in line with COP21 Paris agreement approved by the Pakistan’s government,” Said AFD Country Director Jacky Amprou. ADB is Pakistan’s largest development partner in the energy sector with a focus on investments, reforms to strengthen governance and promote structural transformation, effective implementation of projects and programmes, capacity development, and promotion of regional power and gas trading initiatives. For the last ten years, AFD has been promoting green energies in Pakistan through investments in low-carbon-emission energy generation in line with COP21 Paris agreement.

ADB and AFD are committed to support the government of Pakistan’s strategy to solve the energy crisis and to fight climate change through Vision 2025, Pakistan’s comprehensive plan for economic growth. The plan aims to increase power generation, provide uninterrupted electricity to all and improve demand management.

Meanwhile, the World Bank has also approved $223 million. “The two new projects have a strong element of inclusion that is at the heart of the World Bank’s partnership with Pakistan, especially where women, youth and the poor are concerned,’’ said World Bank Country Director Illango Patchamuthu. “Five percent of the world’s unbanked population live in Pakistan. We need to change this to empower people financially, especially women. Karachi contributes about 15 percent of the country’s economy and the World Bank’s support will improve public spaces, mobility, and safety for its citizens,” the WB country director said.

The Financial Inclusion and Infrastructure Project will provide $137 million to help millions of Pakistanis, especially women and the poor who do not have bank accounts and cannot get loans, to have access to these and other financial services. It will upgrade Pakistan’s payment systems to ensure affordable and faster payment services. The project is designed to implement selected actions of the National Financial Inclusion Strategy.

“Our goal is to provide transparent and accessible financial services including micro and small loans to individuals and firms, particularly women and women-owned businesses in Pakistan,” said Gabi George Afram, the project’s Task Team Leader. “We will be working closely with the Central Directorate of National Savings (CDNS) to provide more efficient and convenient access to financial services to 7 million clients through computerisation of their financial systems.”

The project will improve access to financial and banking services for 50 percent of all adults, half of them women, throughout Pakistan by 2020. It will also boost private sector credits to small and medium businesses to 15 percent from 7 percent in 2015.

The $86 million Karachi Neighbourhood Improvement Project will benefit almost one million residents, business owners and commuters by improving living conditions in the Saddar, Korangi and Malir areas of Karachi. It will help improve the safety, accessibility, and attractiveness of public spaces in Karachi, such as streets, parks, city squares and pedestrian areas. It will ensure equal access to all including women, youth and the poor. The project will also make it easier for the public and investors to access services such as construction permits and business registrations.

“This project represents the start of a long-term partnership between the city of Karachi and the World Bank Group and will help strengthen confidence in the city’s administration among residents,” said Jaafar Friaa, the project’s Task Team Leader. “A systematic engagement with citizens will ensure that investments in public spaces are responsive to the local context and build community ownership of the project.”

This project will support the setting up of a multi-member Steering Committee that includes the local government, civil society and private sector. It will guide the development of the city by laying out a vision. Both credits are financed by the International Development Association, the World Bank’s fund for the poor, with a maturity of 25 years, including a grace period of 5 years.

 

IMRAN ALI KUNDI