ISLAMABAD, Sept 6: The Asian Development Bank (ADB) has expressed dissatisfaction over governance, power sector reforms and poverty situation in Pakistan and warned that growing oil prices will affect growth rate during the current year.

This was stated by ADB president Haruhiko Kuroda at a news conference he held with Adviser to Prime Minister on Finance Dr Salman Shah at the end of his two-day visit to Islamabad on Tuesday.

However, he pointed out, the direction and trend of government policies were right and if continued ‘for a longer period’ they could tackle these problems.

Dr Shah said the ADB had agreed to enhance its assistance to Pakistan to $4 billion in next three years from about $900 million a year earlier. He said the ADB chief had committed to provide $1.5 billion to Islamabad during the ongoing fiscal year and maintain a flow of $1.25 billion in next two years.

He said the ADB would also provide assistance for improvement of big cities. The government, he added, had set up a ‘Karachi Infrastructure Development Company’ to channel the donor funding to be used for improving the city’s infrastructure besides using capital markets for the purpose.

The ADB chief said he appreciated structural reforms and economic policies pursued by the government and its achievements in the past five years.

Mr Kuroda said he had assured the country’s leadership of ADB’s continued support and strengthening it in the fields of infrastructure projects like water, power and transport.

He said poverty was a ‘very serious’ issue in Pakistan and South Asia which needed to be tackled seriously.

He said the bank had been expressing ‘due concern’ over the poverty situation in the country but noted that significant progress had been made by the government in collaboration with multilateral agencies which, if extended over years, could help eradicate poverty.

Answering a question, he said governance was ‘still’ an issue in Pakistan and the ADB was providing assistance to improve it through the local government system and the devolution programme.

He said that projects’ outcomes and objectives of foreign assistance had not been satisfactory in Pakistan. Many projects, he added, were delayed and thus became outdated by the time they were completed. He said the exercise of project formulation, approval and implementation should be restructured, modified and made more relevant and effective.

He said the country needed ‘a lot of improvement’ in the power sector because it not only had economic repercussions but also social fallout. He said the sector faced the challenge of improving governance in power utilities.

In reply to a question why Pakistan could not perform well in the past 35 years with the foreign aid while many other countries had turned into Asian tigers, the ADB chief said that states like Malaysia, Thailand, Singapore and Indonesia were successful because of strong ownership and good governance, infrastructure and human resource development through education. Similarly, he added, there could be many explanations for countries that could not do well.

He warned that the steep rise in international oil prices would have negative impact not only on Pakistan’s growth rate during the current year but it would also the affect entire developing Asia. Significant reduction in oil prices was expected at some stage, he added.

He said the ADB was open to providing funds for big dams in Pakistan provided there was national consensus and issues of environment and settlement of displaced population were addressed under the bank’s safeguard policies.

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