ADB's new approach for Pakistan

ADB will focus more on performance based loaning to make sure the project yield the desired results

From Shamim Ahmed Rizvi,
 Islamabad
Apr 09 - 15, 2001

In his first Press conference, the new Resident Representative of Asian Development Bank (ADB) in Pakistan, Marshuk Ali Shah, in Islamabad on Tuesday, said that while appreciating the reforms programme initiated by the present government the Bank was trying to strike a new working relationship with the government of Pakistan which would be based on commitment, understanding and seriousness.

Explaining the new approach he said ADB will focus more on performance based loaning to make sure the project yield the desired results and have local ownership, "We will see how ADB can work with the government as partners whoever government is in place and whatever changes may take place in future", he said adding that ADB would slash down its aid flow to Pakistan if the agreed reform process was not fully adhered to.

Mr. Shah disclosed that ADB wanted to help Pakistan to tide over its economic difficulties and had therefore decided to offer $ 450 million during 2001. The purpose was to help Pakistan build up its foreign exchange reserves and improve its balance of payment position. The Bank has linked the disbursement of highly concessional loans to good governance and consistency in policies. The quantum of soft loans to Pakistan even on zero interest can be increased to Pakistan provided these two conditions were met.

Mr. Shah was, however, critical of unusual delays in the project implementation which badly hampered the disbursement programme for Pakistan. Giving a latest example he said that women health project was approved and soft loan committed by the Bank in 1999. The project has not yet started. Even the project director has not been appointed so far. Similarly Barani Area Development Project was approved on priority basis last year but the work on project has not started yet.

He, however, disclosed that an ADB mission is arriving in Pakistan early next month to study the problem of drought and its impact on the economy. On the basis of its study, the ADB would work out, in consultation with the government a new programme for assistance. He outlined his resolve to ensure effectiveness of ADB assistance and said the mission would start sectoral study, and hold negotiations with the government. It would take about six months or so to determine the size and nature of the programme. The mission would also visit the affected areas and consult the stakeholders.

In reply to a question, Mr. Shah said that seeking $ 6 billion soft loans was very ambitious. However, it would not be difficult to receive one billion dollar annually if the economic revival programme is well implemented. According to him, ADB has been considerate to the country's need for concessional lending. For instance last year while discussing a $250 million loan, the bank agreed, on Pakistan's suggestion, to channelise it only through soft window. However, much would depend on the commitment and performance of the government and its economic revival programme. If it is on track and the government makes a request for extraordinary soft loans, he would certainly present it to headquarters in Manila.

As a new head of the mission, Marshuk said that his goal would be to make the Pakistan Resident Mission more effective at resolving issues and ensuring more effective utilisation of ADB assistance. He already held negotiations with the federal government to change the way of ADB's operations and held intensive discussions with the finance minister, planning minister, secretary general finance and economic affairs secretary. He would shortly visit the provincial capitals and meet the economic managers there in pursuance of the same goal.

In his introductory remarks, Murshuk lauded the government poverty reduction strategy as presented at the Pakistan Development Forum. "We find that it makes sense and all were ecouraged by the government's presentation".

He expected that there would be a partnership agreement with the government. Elaborating it in reply to a question, Murshuk said that the bank would deal with over a dozen aspects of poverty and he expected that the bank assistance would be around $ 500 to $ 600 million.

Asked what was meant by new role, he said he was seeking extensive dialogue with the country and also to know if the country could absorb more assistance. However, everything would be based on the criteria of performance.

Continuing Mr. Shah said that ADB's Pakistan Resident Mission (PRM) primary role has been to assist in the implementation of ADB projects in Pakistan. ADB's has recently adopted a new policy under which the role of Resident Mission has been greatly expanded. PRM therefore would be more actively involved in broader issues and policy dialogue with the government. However, my immediate goal is to look at how PRM can be more effective at resolving issues and ensuring more effective utilization of ADB assistance to Pakistan.