ISLAMABAD: Pakistan needs to continue addressing governance and security issues, increase exports, strengthen public enterprises, and improve its business and regulatory environment to attract more investment and increase productivity, says Asian Development Bank (ADB).
The “ADB and Pakistan: Fact Sheet” updated on its website stated that implementing structural economic reforms is critical for sustained and higher economic growth.
Pakistan’s economic fundamentals have improved over the past three years. To maintain this momentum, the government must address vulnerabilities arising from the wider fiscal and current account deficits, falling foreign exchange reserves, rising debt obligations, and greater external financing needs.
Pakistan’s current growth will be influenced by projects under the China-Pakistan Economic Corridor (CPEC), Central Asia Regional Economic Cooperation (CAREC) and others involving infrastructure spending on roads, railways, pipelines and electricity networks.
The fact sheet maintains that ADB will continue to drive Pakistan’s development through investments outlined in the country operations business plan, 2018-2020. This includes reengaging in education and health, and encouraging greater use of smart technology and innovative approaches to achieving the Sustainable Development Goals (SDGs).
To improve Pakistan’s competitiveness and fiscal sustainability, the ADB will continue to help the government manage external debt and the balance of payments, and maintain the momentum of macroeconomic and structural reforms to support economic stability and expansion.
The report further stated that ADB has approved $32.1 billion project assistance for Pakistan. Under the country partnership strategy, 2015–2019 and the country operations business plan 2018 -2020, the ADB is committed to ensuring high, sustained and inclusive growth for Pakistan. The new business plan shows that the country’s sovereign operations will be increased significantly to $7.1 billion over the next three years. Along with its continued focus on energy, infrastructure and institutional reforms, the ADB will reengage in education and health. Cumulative disbursements to Pakistan for lending and grants financed by ordinary capital resources (OCR), the Asian Development Fund, and other special funds amount to $22.14 billion.
In 2017, the ADB approved subprogram 3 of the Sustainable Energy Sector Reform Program ($300 million), with co-financing of €100 million from Agence Française de Développement (AFD); $260 million for the second power transmission enhancement investment program to expand transmission in Sindh and Balochistan and reduce outages; and $500,000 for a knowledge and support technical assistance package to update Pakistan’s energy sector plan.
In 2017, the ADB approved a loan of $800 million to expand Pakistan’s regional connectivity and a first tranche of $180 million (of a total investment of $800 million) to upgrade highways in Sindh and Khyber Pakhtunkhwa. The ADB approved $300 million to reform public sector enterprises, bringing the total investment to $600 million since June 2016.
The ADB approved knowledge and support technical assistance of $3.27 million to strengthen Pakistan’s public private partnership (PPP) framework and enable institutional reforms. It also supported the operationalisation of EXIM Bank.
In Punjab, the ADB provided a $200 million loan to improve urban infrastructure and service delivery in Sahiwal and Sialkot; $700 million to upgrade irrigation; $275 million to develop non-perennial surface irrigation and strengthen water management capacity; and $100 million to develop PPP projects, with $100 million from the government of Punjab, $19.62 million from the government of the United Kingdom, and $4.01 million in technical assistance grants administered by ADB for a total investment of $223.63 million.
To support PPPs in Sindh, the ADB approved a $100 million loan in November 2016, effective from the first quarter of 2018, with $65 million from the government of Sindh, $19.23 million from the government of the United Kingdom, and $4.75 million in technical assistance grants administered by ADB for a total investment of $188.98 million.
In Khyber Pakhtunkhwa, the ADB provided $335 million and AFD provided €130 million to develop a bus rapid transit system in Peshawar, which will deliver universal bus access with dedicated seating for women. The ADB has approved knowledge and support technical assistance of $2.41 million to support economic corridor development in Pakistan to help reduce poverty and overcome district disparities.
The ADB continues to support the Benazir Income Support Program to assist the poor and vulnerable women. It also helps underwrite the government’s flagship $430 million cash transfer program. The ADB approved $200 million to strengthen Pakistan’s disaster risk management capacity and reduce country’s vulnerability to extreme weather events and climate change.
In 2017, $3.17 billion financing for 29 non-sovereign transactions funded by ADB’s own resources was approved. Total commitments achieved in 2017 amounted to $2.29 billion for 27 transactions. Both OCR approvals and commitments were at record highs in 2017. Around $5.9 billion of co-financing from commercial and official sources were mobilized.
Total OCR outstanding balances and commitments of ADB’s non-sovereign transactions as of December 31, 2017 amounted to $10.9 billion.
From 1974 to the end of 2017, cumulative direct value-added official co-financing commitments for Pakistan amounted to $2.72 billion for 43 investment projects and $82.26 million for 49 technical assistance projects.
Cumulative direct value added commercial co-financing for Pakistan amounted to $7.69 billion for 21 investment projects. In 2017, Pakistan received $344.10 million loan co-financing from the government of France for four investment projects; and $19.23 million grant co-financing from the government of the United Kingdom for one investment project.
In 2017, the ADB and AFD approved over $400 million to support Pakistan’s energy security. In addition to PPP projects, the ADB and the government of the United Kingdom co-financed $327 million to construct 61 kilometers of motorway in Punjab, 59km of expressway from Hassanabdal (Punjab) to Havelian (Khyber Pakhtunkhwa) - a vital segment of the CAREC corridor - and to rehabilitate 197km of the highway network in Balochistan. The ADB partnered with the Asian Infrastructure Investment Bank to co-finance $200 million to construct 65km of motorway from Shorkot to Khanewal in Punjab, with an additional $34 million grant from the government of the United Kingdom.
In Pakistan, 17,162 contracts worth $15.35 billion have been awarded to contractors and suppliers since 1966. Consulting Services ADB’s procurement contracts in Asia and the Pacific for consulting services under loan, grant, and technical assistance operations totaled $627.79 million in 2016 and $741.84 million in 2017. Cumulative procurement since 1966 was $12.02 billion covering 55,420 contracts. In Pakistan, 2,272 contracts worth $283.59 million had been awarded to consultants since 1966.