Pakistan turns down World Bank, ADB loan

[ajpirzada]

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ISLAMABAD: Pakistan has turned down a $2 billion loan from the Asian Development Bank (ADB) and another $1 billion loan from the World Bank to reconstruct infrastructure destroyed by the devastating floods. Islamabad has now decided to rebuild "from its own resources".

The News International cited sources as saying that the move stunned the ADB in particular.

The multibillion credit lines were meant for the reconstruction of the public sector infrastructure destroyed by the floods that uprooted nearly 20 million people and left 1,700 dead.

Finance Minister Hafeez A. Sheikh has conveyed to both the development banks that the government was not interested in using the loans for rebuilding infrastructure.

He told the banks that Pakistan would prefer to use the approximate amount of $1.5 billion to $2 billion, being received from the UN and other sources, for relief and speedy recovery of the flood-hit areas.

"And as far as rebuilding of the flood destroyed infrastructure is concerned, the government shall do it from its own resources," a source quoted the minister as saying.

Minister of State for Finance, Hina Rabbani Khar, told the daily that the "government has changed its policy" and it won't use the loans offered by the WB and the ADB for the reconstruction of the infrastructure; instead, it would use the other grants of $1.5 billion to $2 billion.

She said the federal and provincial governments would divert their resources to reconstruct the infrastructure hit by the floods.

She added that the federal government was yet to take the provinces into confidence over its decision not to use the ADB and the World Bank loans amounting to $3 billion for the reconstruction phase.

The media report said Islamabad, Khyber-Pakhtunkwha and the Punjab had expressed their opposition to the loan, whereas Sindh, which supported the loans, was the exception.

"The government's decision not to use the loan of $3 billion has really perturbed both the World Bank and the Asian Development Bank, as their targets to market their loans in Pakistan would suffer," sources in both the banks told the daily.

Ismail Khan, who deals with the media in the ADB, declined to either confirm or reject the news and only said that the ADB's country director was not available for comments as he had gone to Manila.

Pakistan turns down World Bank, ADB loan - The Economic Times

[Zakii]

excellent news..... I wonder how PPP ko aqal aa gayi bethay bethay? all of a sudden?

Very good decision..

[SMC]

I believe Zardari may have realized that 10B he already has is more than enough to last his whole lifetime hence there's no point in getting more loan.

[SurvivoR]

May be Army pressure and fear of Judiciary?

[forcetrip]

It would be great if someone could post the structure of the debt being offered.

[WAQAS119]

I don't know whether this is a political decision or genuine economic one but I sincerely hope that this decision will come out good for Pakistan.

[mehboobkz]

Its a ruse!

Wait and see U turn on this in coming weeks!

Pakistan has to repay almost 4 billion dollars every year - where will they get that from?

[Zakii]

Pakistan is in 70+ Billion dollars debt and decline economy, no more loans.

Idiot politicals!

Where did you get this figure from?
kindly prove it

[Tayyab1796]

excellent news..... I wonder how PPP ko aqal aa gayi bethay bethay? all of a sudden?

Very good decision..

Bro the rumour has it that PPP was always willing but Rawalpindi wasn't. Thanks Pindi u saved the day again.

[Machoman]

I think Uncle SAM need to pay this on behave of us! lol

[rubyjackass]

For those singing idiotic praises for the army even for this... this is your government's well-planned decision.
DAWN.COM | Front Page | Govt studying future plan without IMF

the proposal to conclude the IMF programme had three positive aspects. One, the government would be able to adjust repayment of about $1.2 billion due to the IMF during the current fiscal year against the last IMF’s tranche, instead of piling up more loans.

Second, it would give a positive signal to the international capital market that Pakistan’s economy was stable enough to meet its programme criteria and international obligations despite devastations caused by floods.

Third, the sources said, the government would be able to negotiate a fresh programme with the IMF, if need arose at a later stage, on the strength of an earlier successful programme completion.

[faisaljaffery]

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Loans are not bad, the thing is that they should be utilized properly and economy should be in a position to repay them. USA has the biggest loan of Federal Reserve amounting trillions of dollars. ADB loans are offered on very cheap interest rates ranging from 3 to 6 %. Instead of raising domestic debt which is high cost forign loan are a good option for the Government.