Pakistan, ADB ink $1.54b financing agreements
ISLAMABAD – Pakistan and Asian Development Bank (ADB) signed six financing agreements of $1.543 billion to improve energy, transport, irrigation, and urban sectors in Pakistan.
Omar Ayub Khan, Federal Minister for Economic Affairs, witnessed the signing of six financing agreements amounting to $1.543 billion between Economic Affairs Division (EAD), Government of Pakistan and Asian Development Bank (ADB). Mian Asad Hayaud Din, Secretary, Economic Affairs Division, and Yong Ye, Country Director, Asian Development Bank (ADB), signed the 6 financing agreements in Islamabad.
Under the $300 million policy-based loan for energy sector, ADB is supporting technical, and governance reforms to strengthen Pakistan’s energy sector and its financial sustainability. The financing is part of the second subprogram of ADB’s Energy Sector Reforms and Financial Sustainability Programme, which aims to reduce and manage the accumulated cash shortfall across the power supply chain known as circular debt.
ADB will provide $235 million loan to upgrade 222-kilometer Shikarpur–Rajanpur section of the National Highway 55 from two lanes to four-lane carriageway. The N55 is part of the Central Asia Regional Economic Cooperation (CAREC) Corridor 5 which links the ports of Karachi and Gwardar in southern Pakistan with national and international economic centers to the north. The project will improve operations along the network and enhance capacity of National Highway Authority.
The $650 million financing will help improve the livability of five cities in Pakistan’s Khyber Pakhtunkhwa (KP) province by upgrading urban infrastructure and expanding access to reliable services. The project consists of a $380 million ADB loan and a $5 million grant with a co-financing of $200 million loan by the Asian Infrastructure Investment Bank to improve water supply and sanitation in the cities of Abbottabad, Kohat, Mardan, Mingora, and Peshawar, by enhancing water supply systems and sewerage networks benefitting up to 3.5 million people. ADB will also provide $15 million under the Second Project Readiness Financing (PRF-2) for Khyber Pakhtunkhwa Cities Improvement to plan and design three ensuing loan in the next three years to provide sustainable urban services and mobility across multiple cities in the province, following a systematic approach to planning, higher quality of project readiness, and increased focus on institutional capacities for sustainable project operations.
The $603 million results-based lending programme aims to expand social protection programmes in Pakistan through conditional cash transfers. The programme will support the implementation of Ehsaas, Pakistan’s national social protection and poverty reduction strategy. Under the Integrated Social Protection Development Program, ADB will provide a regular loan of $600 million and a $3 million grant from the Asian Development Fund and will administer a $24 million grant from the Education Above All Foundation.
ADB will provide $5 million ‘project readiness financing’ for the Kurram Tangi Integrated Water Resources Development Project. The facility will ensure high-quality design, stakeholder engagement, and safeguards readiness of the ensuing project for timely approval and cost-effective implementation.
Omar Ayub Khan, Federal Minister for Economic Affairs, expressed his deep appreciation and thanked the president, senior management and board of Directors of Asian Development Bank for their continued and enhanced financial support towards reforming energy sector, improving road networks, enhancing social protection and developing sustainable cities in Pakistan. Minister for Economic Affairs stated that Khyber Pakhtunkhwa Cities Improvement Project ($385 million) will help provincial and city governments of Khyber Pakhtunkhwa province to improve the livability of five cities (Abbottabad, Kohat, Mardan, Mingora, and Peshawar) by providing water supply, sewerage, solid waste management and green infrastructure. It will also provide institutional support to improve service delivery and performance of municipal companies with special focus on promoting gender-friendly municipal services through empowerment and capacity development. The project will benefit up to 3.5 million people in these five target cities of Khyber Pakhtunkhwa. The project also supports the government’s development priorities and Prime Minister Imran Khan’s vision of Clean Green Pakistan.
Minister for Economic Affairs also highlighted that under the Central Asia Regional Economic Cooperation (CAREC) Corridor Development Investment Programme Tranche-II ($235 million), a 222-km Shikarpur-Rajanpur Section of Indus Highway (N-55) will be dualized (four-lane carriageway) which traverse Sindh and Punjab provinces on the western side of Indus River via Kandhkot, Kashmore and Rojhan. The dualization of Indus Highway (N-55) will not only boost local economic activities but also promote intra/inter-regional trade and movement of people by improved connectivity and reduced travel time. Indus Highway provides another international corridor linking China, Afghanistan and their neighboring Central Asian countries to the Arabian Sea. In order to ensure comfort and safety of road users, the section will be equipped with bus shelters, trauma centers and rest areas as well as road safety facilities, he added.
Minister for Economic Affairs stated that Integrated Social Protection Development Program will support the government’s efforts to implement Ehsaas Programme including social protection and poverty reduction schemes in line with the vision of Prime Minister Imran Khan. Kurram Tangi Integrated Water Resources Development Project is one of the top priority projects in the erstwhile FATA which includes construction of a dam with water storage facility, hydropower generation and construction/upgrading of irrigation system covering 140,000 hectares. It will not only help to increase agricultural production, create employment opportunities and reduce rural poverty in the region but also improve food security in the country. The minister reiterated the government’s strong commitment to support all the provinces, AJK and Gilgit-Baltistan for achieving inclusive growth and sustainable development.
Shixin Chen, Vice President, ADB said that despite a challenging situation caused by the COVID-19 pandemic, government of Pakistan continues to make progress in implementing comprehensive economic, fiscal and structural reforms. He also commended the efforts of government of Pakistan for addressing socioeconomic challenges and economic recovery amid pandemic. Chen appreciated the mass vaccination program for controlling the spread of COVID-19 for which ADB also provided $500 million to Pakistan. Eugene Zhukov, Director General, ADB expressed that ADB will continue to support government’s development priorities and stands committed to support Pakistan for a green, resilient and sustainable recovery. Yong Ye, Country Director, stated that ADB financial support will strengthen Pakistan’s economy and reduce the risk of external economic shocks.
“The projects signed today mark ADB’s strong commitment for Pakistan’s post-pandemic recovery and sustainable development. Pakistan and ADB will continue working together to improve economic management, build resilience, boost competitiveness and private sector development,” said Yong Ye, ADB’s Country Director for Pakistan.