The Asian Development Bank has approved a five-year $6 billion loan to support development projects in Pakistan, including energy and transportation sectors amid reports in the international media that the nation’s public debts have touched $163 billion mark. The latest package will provide the government an average $1.2 billion annually until the end of fiscal year 2019 to develop infrastructure and introduce institutional reforms. At least two-third of the loan is attached with commercial modules and the remaining third will be concessionary. The ADB has allocated just $15 million under the head of technical assistance for Diamer-Bhasha Dam out of the proposed funding of $14 billion.
The donor agencies are in the habit of attaching strings to the loan agreements, following which the ADP requires the government to introduce energy sector reforms and maintain public finances to qualify itself for the disbursements. Despite the approval of loan, the bank has expressed dissatisfaction over the capacity of the government to devise a mechanism to handle growing corruption, irregularities in the procurement process, bureaucratic rigmaroles, lack of internal control and professional ability to implement reforms. The financial package will also assist the government in achieving various targets, covering from energy, transportation, agriculture, natural resources, rural development and water sectors development to urban infrastructure and public sector programs. However, the lion share of the assistance will be spent on the improvement of infrastructure, power, transport, agriculture and urban services sectors.
The country’s electricity distribution and transmission network is in a shambles and over $2 billion are earmarked to ensure reduction in line losses, electricity theft and maintain financial viability in the energy sector. At least $1.7 billion will be spent to improve transportation infrastructure, including the road network and building mass transit systems in Peshawar and Karachi while $500 million has also been allocated for public sector management and restructuring of loss-making organisations. The bank has also planned to lend $1.3 billion, including $400 million in budgetary support for the energy sector, $200 million for post-flood highways rehabilitation, $170 million for the construction of Gojra-Shorkot highway and $150 million for improving border services.
As the country’s total public debt has reached $163 billion, the government will have to check the loopholes within the management and administrative cadre to save the precious money from leakage. As the ADP chief has pointed out, the country has failed to achieve millennium development goal as poverty has increased instead of decreasing. There is a need to put the country back on track as several government departments need to be purged of corrupt elements and writ of the government must be ensured not only on defence and security, but also in the financial sectors.
