ADB raises aid to Pakistan to $950 million

Tahir Ikram

ISLAMABAD: The Asian Development Bank (ADB) said on Monday it planned to raise economic assistance to Pakistan this year to $950 million from a planned $626 million because of the impact of the Afghan war. “The recent and ongoing events in the region have greatly worsened the economic situation in Pakistan,” ADB President Tadao Chino told a news conference.

“In this connection we propose to increase our development assistance for this year to around $950 million. It is a substantial rise from the $626 million planned before the events of September 11,” he said. Mr Chino said $350 million was on concessional terms and the rest were normal ADB loans.

Pakistan has suffered from falling trade in the wake of the conflict but has also received substantial aid since agreeing to back the US campaign in Afghanistan triggered by the attacks on New York and Washington. Pakistan’s military government of General Pervez Musharraf is pursuing a medium-term economic reform programme agreed with the International Monetary Fund, winning praise from multilateral donors.

The Manila-based ADB has been a key backer of Islamabad’s economic reforms and has committed up to $10 billion in economic assistance to Pakistan, of which $7.8 billion has been disbursed since 1968, ADB officials say. Mr Chino arrived on Sunday and is due to meet President Musharraf later on Monday.

Pakistan Finance Minister Shaukat Aziz, who has been seeking help to ease the burden of a foreign debt of nearly $40 billion, welcomed the ADB assistance. “This afternoon we are going to work with his colleagues on details of future years. This $950 million will be up to December 31, and most of it will be quick disbursing,” Mr Aziz told the same news conference.

Pakistan was already in line to receive extra foreign assistance for its efforts to bring state finances under control after years of neglect but all aid has been accelerated because of the Afghan crisis. The United States, grateful for Pakistan’s backing in the war, has lifted sanctions imposed for the country’s nuclear programme and for the bloodless 1999 coup that installed Musharraf. It has also joined other countries in writing-off or rescheduling bilateral debt and providing grants for development and balance of payments support.

The IMF is working on a new three-year programme expected before the end of the year that will form the basis for the ADB and World Bank to also extend support. The combined programmes are expected to be in the region of $2 billion.

— Reuters