. .

The Asian Development Bank being the first international financial institution to commit a firm figure for this year

Nov 19 - 25, 2001

That the International community is appreciative of the Pakistan's difficult economic position in the wake of US led attack on Afghanistan is reflected from the pledges of economic assistance from different countries and institutions. Apart from US, Japan, Saudi Arabia and IMF Asian Development United Arab Emirate (UAE) and the Asian Development Bank (ADB) pledged fresh assistance last week for Pakistan to enable it to tide over its economic difficulties.

The UAE offered 265 million dollars in highly concessional loan. A day earlier the ADB announced that it had enhanced this year's aid to Pakistan by 324 million dollars, raising the total to $950 million, all which is being offered on confessional terms. Both these packages of assistance are for financing development projects with the ADB focusing mostly on social infrastructure while the amount pledged by the UAE will be channeled towards physical infrastructure projects, especially for expanding power and water capacities.

The UAE loan, being made available on a concessional two per cent interest rate and 15 years' repayment period with a grace period of five years, was announced by the visiting UAE minister of information, Sheikh Abdullah bin Hayed al Nahyan, while the ADB President Tadao Chino, who came to Pakistan to make an on-the-spot study of Islamabad's needs, himself made public his bank's proposal to enhance its assistance to Pakistan for the current year from 626 to 950 million dollars.

The expression of solidarity with Pakistan by the UAE President is a manifestation of the deep rooted relations existing between the two brotherly Muslim countries. Both nations have common faith, history and culture and have not only always stood by each other at times of their crisis, but have also shared each other's joys and sorrows. Pakistan and UAE have always coordinated their responses and shared perceptions at the regional and international levels. Both are peace-loving countries and have always contributed towards the promotion of peace in the region as well as in the world at large. Pakistan has played a consistent role in the development of infrastructure in the UAE and modernization of its various sectors to strengthen its security and socio-economic development. The visit of Sheikh Abdullah bin Zayed Al-Nahyan to Islamabad to convey UAE's solidarity with Pakistan at a time when it has to bear multifarious pressures in the wake of the US military operations in Afghanistan is of course, very significant in the objective conditions prevailing in the region. The Pakistani people obviously feel obliged to Sheikh Zayed Bin Sultan Al-Nahyan for his support at this crucial juncture. Sheikh Abdullah's call for explicit support to Islamabad in the current situation is certainly of great value to Pakistan. Interestingly Sheikh Abdullah's visit has coincided with the signing of the agreement under which the Abu Dhabi Development Fund will provide 265 million dollars concessional loan to Pakistan for six development projects to boost Islamabad's national economy.

The Asian Development Bank announced $950 million economic assistance for Pakistan acquiring the distinction of being the first international financial institution to commit a firm figure for this year. Compared to last year's $626 millions the new commitment is substantially higher and most of it will comprise quick disbursing project loans. About one-third of it or $350 million will be available on concessional terms. In order to avoid any further addition to the country's external debt, the government is seeking concessional credits. The ADB's newly announced package should help in giving the much needed support for the country's battered economy. The relief can be described as timely.

While the ADB has appreciated the on-going economic reforms in Pakistan, a pointed reference by its president to poverty reduction, improved governance and devolution of power is noticeable. He described them as important items on the reform agenda hoping that these will be pursued with focused attention. In response the finance minister said that the areas Pakistan is working on with ADB are poverty reduction, human development, gender development, good governance, environmental and legal reforms. This clearly indicates that the reform programme in all these areas ought to remain on track to qualify for continued support from this or other international financial institutions.

The United States which earlier pledged a cash assistance for Pakistan of 600 million US dollars has now increased to one billion after Bush-Musharraf meeting in New York last week. Japan which was Pakistan's largest donor until we carried out our nuclear test in May 1998, has also lifted its sanctions and one hopes that very soon Tokyo would resume its assistance which had averaged around 500 million dollars annually in the past. The Europeans have not only announced liberal assistance but have also offered increased market access to Pakistani goods from January next year. The World Bank and the IMF are seriously considering Pakistan's request for a medium-term assistance of a billion dollars over the next three years from the Poverty Reduction and Growth Facility (PRGF). Following the approval of this request in late December this year, the Paris Club is expected to take up our application for rescheduling of most of our bilateral debt amounting to a little over 12 billion dollars. Some bilateral donors are considering our request for debt write-offs, while some others, including Canada and partly Britain, have already converted their loans into development assistance. So, the situation on the aid front looks highly optimistic as of today. However, it is likely to take at least about six months to a year for this scenario to become a reality. Until then, we seem to be on our own.