18 December 2003 from The Dawn Newspaper Pakistan

Masters of the failures
70pc of $4.6bn ADB projects failed: Report

By Arshad Sharif

ISLAMABAD, Dec 18: More than 70 per cent of the Asian Development Bank's failed projects in the country are potentially the equivalent of $4.6 billion that Pakistan owes to the bank out of a total debt of $6.5 billion, a report by US-based Environmental Defence distributed here on 18 December showed.

Speaking at a seminar organized by an NGO, international policy analyst of environmental defence Shannon Lawrence said the unsustainable ADB projects failed to produce lasting economic or social benefits for the country.

Sharing the findings of an analysis of project audit reports for Pakistan from a study titled 'The Asian Development Bank: In its own words', Ms Lawrence said   the same mistakes were being repeated again and again   in different ADB projects over the years at the expense of taxpayers who had to bear the ultimate consequences of badly executed policy initiatives and programmes.

According to the report, Indonesia and Pakistan are ADB's first and second largest cumulative borrowers having received more than one third of total funds disbursed during the 36-year history of the bank.

Since 1968, the report said, Pakistan had received more than $12.6billion in loans from the ADB making it the second largest cumulative borrower after Indonesia. At the end of 2001, the ADB funding for Pakistan increased by 148 per cent to $957 million.

In 2002, the country received more than $1 billion and also became the top client of ADB's concessional lending window, the report added. Interestingly enough, the report based on  ADB documents identifies a disturbing pattern of systematic failure on the part of the bank.

"A striking number of the ADB-financed projects in Pakistan suffer from design flaws and lack of attention to thorough project preparation." In the execution of projects, the report noted a pattern of absence of Benefit Monitoring and Evaluation (BME) systems and baseline data, lack of consultation with prospective beneficiaries and user groups, lack of community participation, adverse impacts on social equity and income equality that have fostered ethnic instability in certain ADB projects.

Moreover, the report said, even projects considered 'successful' by the ADB auditors benefited large landholders at the expense of small farmers and terminated five years behind schedule like the South Rohri Fresh Groundwater Irrigation Project.

Similarly, the report said, the Balochistan Fisheries Development Project ignored local customs and preferences in project design while failing to account for environmental impacts.

In the Third Health and Population Project, the report said, the ADB failed to assess the impact of project or ensure that benefit monitoring and evaluation systems were implemented as required by loan convenants.

The report said in the Chashma Right Bank Irrigation Project, the ADB failed to conduct any comprehensive analysis of socio-economic and socio-cultural conditions in the nearly 30- year implementation time of various stages of the project.

According to recent estimates from organizations working with communities in the project area, more than 50,000 people have been or will be negatively impacted by the extensive irrigation project. Daily Dawn 19 12 2003

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MAY 2003
Pakistan, Buried under US $65 billion in foreign and domestic debt, plans to get $500m more from WB on June 12

The World Bank's board meeting will be held in the first week of July to approve $100m budgetary support for Sindh government and $90m similar support for NWFP. The $500m SAC-2 is the biggest amount to be offered to any country in one single shot at a marginal 0.75 per cent service charges. See details below

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WB to give $500m on June 12

ISLAMABAD, May 27 The World Bank will disburse $500 million Structural Adjustment loan (SAC-2) to Pakistan on June 12 immediately after its board meeting on June 11 in Washington, says a senior official of the bank.

He told Dawn here on 27 May that another bank's board meeting will be held in the first week of July to approve $100m budgetary support for Sindh government and $90m similar support for NWFP.

The $500m SAC-2 is the biggest amount to be offered to any country in one single shot at a marginal 0.75 per cent service charges. It will be extended from the Bank's International Development Assistance (IDA) window. Earlier, Pakistan had been offered $350m SAC-1 for improving balance of payment support in 2001 which was also a single tranche disbursement.

The official said that SAC-2 will be given for carrying out structural reforms, financial management reforms, audit and accounts reforms, education reforms and oil and gas sector reforms. The money will also be available for poverty alleviation and that it will basically cover the government's priorities contained in the Interim-Poverty Reduction Strategy (I-PRSP).

He said that it was good to see that the government was monitoring the implementation of the measures in the I-PRSP which will help increase transparency and ensure scrupulous funding to various institutions.

Sources in the multilateral agencies believed while the World Bank, IMF and the ADB were extending all necessary financial support, Pakistan will have to generate a surplus in the non-interest current account of the balance of payments of nearly one billion dollar annually over 2000-2004 or about 1.5 per cent of the GDP.

This will be in sharp contrast to average annual resource deficits of $1.5 billion, about 3 per cent GDP, run in the 1990s and will require major export expansion as well substantial import saving. In addition, the government should also mobilize at least $3bn from privatization sales Daily Dawn 28/5/02

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Govt fails to utilise ADB loan for technical education project

The ADB had provided Rs 545.724 million loan to the provincial government in 1996 for Technical Education Programme (TEP) while the Sindh government shared Rs 166.683 million. Out of Rs 727.702 million only Rs 166.622 million were utilised. See below details

By Tahir Hasan Khan

KARACHI The Sindh government has failed to utilise the loan approved by the Asian Development Bank (ADB) for promoting technical education and training in the province. Sources disclosing this to The News said the ADB had provided Rs 545.724 million loan to the provincial government in 1996 for Technical Education Programme (TEP) while the Sindh government shared Rs 166.683 million.

Out of Rs 727.702 million only Rs 166.622 million were utilised, said the sources. However, they said, the ADB has now requested the federal government to initiate inquiry into the failure on the part of the authorities concerned and refund the loan. Sources said the authorities had informed the government that bold decisions were needed to complete the project and pointed out that assessment should be made whether technologies both existing and new proposed in the project were actually in demand or not.

They also pointed out that new technologies proposed in the project were picked up without any survey and the government did not have any report about these technologies. They further said that experts also suggested that a technical evaluation committee headed by some private person should be constituted to make analysis and recommendations whether procurements for new technologies should be made or not.

Seven new technologies food, mining, petroleum, sugar, dyeing and printing and graphics and computer Info were suggested in the project which was supposed to complete by 31st December 2001 with a Rs 712.407 million estimated cost, but the authorities failed to complete the task.

According to a report, only 21 out of 43 computer labs and its furniture and equipment were procured. The authorities also failed to hire local and foreign consultants and teachers and experts in required number for the project. The report stated that only eight out of nine foreign and 13 out of 15 local consultants were hired for the project. Sources said the ADB also fixed quota for private institutes in the loan, but the report pointed out that 11 non-governmental organisations (NGOs) had applied for the loan while seven did not qualify and one withdrawn.

The loan was approved for three NGOs but only one of them procured equipment and fully utilised the loan. Ninety per cent civil work was completed by another NGO and the third one had started the construction work. The authorities admitted the failure and stated that it was doubtful whether the government would be able to get suitable training and qualified staff for the project. The News 3/6/02

 

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52% of the Pakistan national budget goes into servicing foreign loans

 

 

More News Briefs

Pakistan to halve debt servicing
Pakistan, buried under US $65 billion in foreign and domestic debt, plans to reduce the burden of debt servicing by half over the next three years. The State Bank of Pakistan (SBP) Governor, Ishrat Husain said Islamabad was pursuing a strategy to reduce its huge debt servicing cost, which leaves meagre funds available for development projects.

From World Bank. 3 January 2002

 

Jubilee Plus condemns Pakistan's Paris Club deal
Jubilee Plus has condemned the outcome of negotiations between Pakistan and creditors at a meeting of the Paris Club last week. Ann Pettifor of Jubilee Plus at the New Economics Foundation said that the deal shows contempt for the human rights of the people of Pakistan.

From Jubilee Plus. 19 December 2001

 

Unprecedented debt restructuring for Pakistan

Pakistan secured an unprecedented debt restructuring deal from the Paris Club in recognition of its economic reforms and its role in the war in Afghanistan, reports. The creditors agreed to restructure the entire stock of the country's US $2.5 billion sovereign debt, extending its maturity and granting a generous grace period during which no principal has to be repaid.

From World Bank. 17 December 2001

 

HIPC treatment for Pakistan?

Pakistan's debt is eating up more than 60% of her domestic revenues, and exceeding her spending on social services by a factor of four. This has led to Jubilee Plus calling on Pakistan's external creditors to provide her with debt relief on the same terms as the Heavily Indebted Poor Countries (HIPC).

From Jubilee Plus. 10 December 2001

World Bank-led meeting on Afghanistan causes concern in Pakistan
Promises of unlimited funding for reconstruction were common at the three-day conference "Preparing for Afghanistan's Reconstruction" in Islamabad. But independent economists and activists in the host country were more sceptical about the new influx of money and donor influence in the region.

From Bretton Woods Project. 7 December 2001

 

Forget the war against poverty
International aid efforts have focused on key western allies since September 11th, have the rich nations forgotten their policy to reward those with good poverty reduction programmes? Charlotte Denny of the Guardian questions whether Pakistan, with high military expenditure and corruption, should be helped in preference to Uganda, with model anti-poverty measures but in desperate need.

From Guardian Unlimited. 26 October 2001

 

Britain pledges aid to Pakistan but debt relief conditional
British International Development Secretary Clare Short announced a US $22 million package for Pakistan towards reforms and helping the refugee crisis. Discussions with President Musharraf also included writing off debt service payments and possible debt cancellation subject to continued economic and political progress.

From United Nations' Integrated Regional Information Network. 22 October 2001

 

Spain urges EU debt help to Pakistan
Spanish Economy Minister Rodrigo Rato has urged the European Union to consider debt relief for countries involved in Afghanistan's refugee crisis, reports El Pais. He believes that coordinated debt relief would send an important message of political support.

From World Bank. 16 October 2001

 

Reform, not fixes, urged for Pakistan
The UK's International Development Secretary has called for comprehensive debt relief for Pakistan, saying donor governments should support a sustained reform drive in the country rather than rely on short-term fixes. Pakistan is struggling under a US$28 billion stock of external public debt, of which more than half is owed bilaterally to donor governments. Leading creditors include Japan, the US, France and Germany. Debt service is projected to consume nearly a third of Pakistan's export earnings this year.

From World Bank. 9 October 2001

 

Debt relief plan urged for Pakistan, as protests raise fears
British International Development Secretary Clare Short has urged comprehensive debt relief for Pakistan, calling for sustained reform rather than short-term fixes, the Financial Times reports. World attention is focused on Pakistan in the current crisis but despite a $28 billion debt burden, the country is not eligible for debt relief under the HIPC initiative.

From World Bank. 9 October 2001

 

US to reward Pakistan with billions in aid
American officials are drawing up plans for a major economic aid package to reward Pakistan for supporting a military operation against Osama bin Laden and Afghanistan's Taliban regime.

From Guardian Unlimited. 25 September 2001

 

No debt write-off until after IMF deal Pakistan aide
Pakistan has not yet formally asked for any write-off of its debts with other countries because it first has to reach a deal with the International Monetary Fund on a new program, an official at the Pakistan embassy said.

From OneWorld.net. 25 September 2001

 

Pakistani groups walk out from World Bank 'consultation'
Civil society represented by NGOs, CBOs and individual academics, professionals and university students, walked out from what the World Bank's so-called public consultation on its Country Assistance Strategy held at NIPA, Karachi on May 17th.

From Bretton Woods Project. 28 May 2001

 

'International Monetary Fraud'
That is what protestors in Islamabad, Pakistan, have called the IMF. A group of non-governmental organisations working for people's rights in Pakistan, the Joint Action Committee, were criticising World Bank and IMF policies. The Committee says that World Bank lending has so far contributed only to increase poverty, destroy the environment and further deprive the poorest sections of society.

From Propoor Infotech Centre. 26 May 2001

 

Band-Aid for a broken system
Making bad loans look good. That's how this report from Worldwatch summarises debt cancelling. "In a sort of money merry-go-round, rich governments, the IMF, the World Bank, and other official lenders are granting poor countries new loans to repay old ones," says the report. Thus for every dollar they lend to low-income nations, they get 83 cents right back in principal and interest payments.

From Worldwatch Institute. 26 April 2001

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