International loans / Grants / Investments / Reports

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ADB approves $320m grant for road rehabilitation in K-P​

News Desk

In December 2023, it had approved $658.8m for projects focused on resource mobilisation, agriculture and school rehab

 

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Germany pledges €20m for ‘billion tree’ project​

Amin Ahmed
November 3, 2024

ECONOMIC Affairs Division Secretary Dr Kazim Niaz and German Development Bank Director Esther Gravenkotter sign the agreement for the second phase of Billion Tree Afforestation Project.—APP

ISLAMABAD: Germany will provide 20 million euros to Pakistan for the second phase of ‘Billion Tree Afforestation Support Project’ (BTASP).

An agreement for the financial support was signed in Islamabad on Saturday. Economic Affairs Secretary Dr Kazim Niaz and Director of German Development Bank KfW Esther Gravenkotter signed the agreement.

The first phase of BTASP is already under implementation in partnership with the Khyber Pakhtunkhwa Climate Change, Forestry, Environment and Wildlife Department.

It will support the protection and sustainable management of forests in KP. The project will focus on new plantation on 10,000 hectares, capacity building of forest departments, and developing a management information system.

The project will support nature-based livelihoods generation geared to alleviate poverty. Moreover, it will promote women’s economic empowerment and participation in decision making processes.

 

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In the first quarter of FY 2025, Pakistan’s Foreign Direct Investment (FDI) rose by 48%, reaching $771 million due to effective strategies by the Special Investment Facilitation Council (SIFC) and improved investor confidence.

Overall foreign investment grew by 70%, from $530 million to $903.5 million.

Leading contributors include
China ($404 million),
Hong Kong ($98 million)
and the UK ($72 million).

This increased FDI is helping Pakistan tackle economic, environmental and social challenges, supporting sustainable growth.

 

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Japan approves $18.5m grant for flood management project in Pakistan​

Tahir Sherani | Amin Ahmed
November 13, 2024

Dr Kazim Niaz, Secretary Ministry of Economic Affairs and Ambassador of Japan HE Wada Mitsuhiro signing exchange of notes for flood management project on Nov 13, 2024 in Islamabad. — PID

The Japanese government on Wednesday approved a grant worth $18.5 million for the construction of three embankments on the Indus River in Haripur district and rain metres at 45 sites along the river in Khyber Pakhtunkhwa and Punjab for effective flood management.

In 2022, Pakistan witnessed the worst floods in its history, which claimed 1,700 lives, destroyed homes and livestock, washed away swathes of agricultural land, affected 33 million people, and incurred losses worth $30 billion, according to government estimates.

“The Government of Japan has approved a grant amounting to JPY 2.831 billion (US$ 18.5 million) for a Grant-in-Aid project titled “Flood Management Enhancement in the Indus Basin” to the Government of Pakistan through Japan International Cooperation Agency (JICA),” a statement from the Ministry of Economic Affairs said on Wednesday.

“The project aims to improve the accuracy of flood forecasts and flood control functions, accumulate basic data that contribute to disaster risk reduction measures, and reduce the risk of loss to humans and the economy, including infrastructure.”

The three embankments will protect local communities from potential human and economic losses including infrastructure. The data from the water and rain metres, managed by the Federal Flood Commission and Water and Power Development Authority, will be shared with various agencies to help predict and manage potential floods.

“The scope of the project is to develop a hydrological and hydraulic observation network besides rehabilitating the river structures damaged by the 2022 floods in the Indus River and its tributaries,” the statement added.

 

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Jul-Oct FDI clocks in at $904.3mn, up 32% YoY​

BR Web Desk
November 18, 2024

Net Foreign Direct Investment (FDI) in Pakistan grew 32.3% during the first four months of the ongoing fiscal year (FY25), clocking in at $904.3 million, revealed State Bank of Pakistan (SBP) on Monday.

During July-October FY25, FDI inflows were $1,242.5 million against an outflow of $338.2 million.

Net FDI during the same period (July-October) of the previous year amounted to $683.5 million.

During October alone, net FDI amounted to $133.2 million, an 18% decrease when compared with the same month of the previous year when it stood at $163.3 million.

On a month-on-month basis, FDI was down over 65%, in comparison to $385 million clocked in during September.

 

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During the first four months of FY25, overall Chinese investment in the country increased by over 100%. China remained the largest investing country, accounting for 46% of the total share with a net FDI of $414.5 million compared with $207.1 million during the same period last year.

Hong Kong emerged as the second-largest investor with a net FDI of $99.7 million, compared with $69.9 million during the same period last year, an increase of 43% and accounting for 11% of the total share.

During 4MFY25, the power sector attracted the major share of investment i.e. 46% ($414.5 million) followed by the financial business sector ($189.6 million) and the oil & gas exploration ($103.8 million).

The development comes at a time when the country faces a shortage of dollars as it makes efforts to increase foreign exchange reserves through non-debt-creating inflow.

Pakistan’s current account posted a surplus of $349 million in October 2024 compared to a deficit of $287 million in the same month of the previous fiscal year, data released on Monday showed.

 

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Data of the Ministry of Economic Affairs showed that the multilateral creditors released $697 million from July to October, which constituted 16% of the annual estimate.

The ADB gave $170 million in four months for multiple schemes compared to the annual estimate of $1.7 billion. The World Bank provided $349 million against the annual estimate of $2 billion. Its funding mainly came for the Sindh Flood Reconstruction Project and the Higher Education Commission development programme.

Meanwhile, Finance Minister Muhammad Aurangzeb on Tuesday met World Bank Country Director Najy Benhassine.

 

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The World Bank's $400 million loan for the Pakistan Raises Revenue programme has failed to achieve its objectives.

The finance ministry said that issues related to the agricultural income tax and general sales tax (GST) harmonisation in coordination with provinces and enhanced focus on the active role of National Tax Council came under discussion.

The Ministry of Economic Affairs reported that the Islamic Development Bank released $150 million, mainly for an oil facility, in four months of FY25. The annual estimate is $740 million. Pakistan also budgeted to raise $1 billion by issuing sovereign bonds but so far no progress has been made. The finance minister has announced that Panda bonds will be issued by December, a deadline he may again miss.

 

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The Ministry of Economic Affairs' report stated that the country received $542 million on account of investment in Naya Pakistan Certificates, which was higher than the annual estimate.

Against the budgeted $3.8 billion worth of commercial loans, the government received $200 million and that too because of a rollover by China in September.

 

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ADB approves $330m in additional financing to bolster Pakistan’s social protection programmes​

In a seperate press release, the agency approved $330 million in additional financing to strengthen Pakistan’s federally administered social protection programmes and services.

“The result-based loan for the ongoing Integrated Social Protection Development Program (ISPDP) will help expand the grassroots-level social protection to alleviate poverty among poor women and their families,” it said.

The programme aims to improve the institutional capacity of the Benazir Income Support Programme (BISP) to “transition to adaptive and climate-resilient social protection”.

“This will include enhancing access to education pathways for children and youth from poor families and increasing access to health services and nutrition supplies for beneficiaries who are in disaster-prone areas,” the statement read.

ADB Director General for Central and West Asia Yevgeniy Zhukov said this would strenghten the country’s “effort to improve human capital development and reduce intergenerational poverty, especially for women who are disproportionately affected during difficult economic situations”.

“ADB’s additional financing will help boost the government’s ability to reach more of the poorest and most vulnerable in Pakistan.”

 

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World Bank approves $240mn for WASH services in Karachi​

Financing to support investments in water, sanitation services

BR Web Desk
December 13, 2024

The World Bank approved $240 million in financing for the Second Karachi Water and Sewerage Services Improvement Project (KWSSIP-2). The project is aimed at providing safely managed water, sanitation, and hygiene (WASH) services in Karachi.

According to a statement released by the World Bank on Friday, KWSSIP-2 will be co-financed by the Asian Infrastructure Investment Bank (AIIB) with $240 million. In addition, there will be a government contribution of $250 million and expected private sector and commercial finance of $269 million.

“Safely managed WASH services are the foundation of public health and quality of life and are central to addressing the stunting crisis in Pakistan,” said Najy Benhassine, World Bank Country Director for Pakistan.

“KWSSIP-2 will expand the scope of investments in bulk water augmentation, water treatment, wastewater treatment and reuse, water distribution, and sewer network rehabilitation. About half of all beneficiaries will be women, 58% will be youth (age 15–24), as well as over half a million people in Katchi Abadis (informal settlements).”

 

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World Bank, govt join hands to woo investment in Discos​

Amin Ahmed
December 15, 2024

ISLAMABAD: The World Bank is currently working with the government to invite private sector participation in the distribution sector, starting with the best-performing power distribution companies (Discos).

The success of this initial initiative could pave the way for the private sector participation in under-performing Discos. However, Discos’ poor financial health remains a significant barrier.

An Asian Development Bank (ADB) report on the power distribution strengthening project says to attract private investment and ensure the success of private sector participation, addressing these underlying problems within the Discos will be critical.

The government has rigorously pursued various options for private sector participation in the distribution sector, but these efforts have faced significant opposition from stakeholders concerned about job losses, increased tariffs, and the potential loss of control over a critical sector. Potential investors have also expressed concerns about the lack of clarity in regulations, tariff mechanisms, and the legal environment.

 

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Japan announces $3.1m grant to procure polio vaccines​

Amin Ahmed
December 12, 2024

ISLAMABAD: The Japanese government has announced a new $3.1 million grant to procure essential oral polio vaccines as part of its continued support for polio eradication efforts in Pakistan.

Pakistan Polio Programme will use the fund to procure more than 20.22 million doses of vaccines to support polio campaigns in 2025, said a press release issued by the Japanese embassy on Wednesday.

An agreement to this effect was signed in Islamabad on Wednesday. Charge d’Affaires ad interim, Tanaka Shuichi, and Unicef Representative in Pakistan, Abdullah Fadil, signed the documents. Prime Minister’s Focal Person on Polio, Ayesha Raza Farooq, also attended agreement signing ceremony.

“The challenges faced in 2024 have underscored the critical need to accelerate our efforts to eradicate polio. With Japan’s continued support, we are further strengthened to intensify our efforts, aiming to achieve zero polio cases by mid-2025 under the leadership of Prime Minister Shahbaz Sharif,” said Ayesha Raza.

Takano Shuichi said on the occasion that “Japan has supported Pakistan to eradicate polio for nearly 30 years despite hindrance such as floods, Covid-19, and terrorist attacks. Since this year marks the 17th anniversary of Japan’s ODA to Pakistan, we would like to renew our commitment to continue to promote routine immunisation including polio vaccination in Pakistan”.

The new funding is part of the continuous support from Japan to the Polio Eradication Programme since 1996. To date, the grant and loan contribution from the government of Japan has amounted to approximately $242.194m to support the polio programme in Pakistan through Unicef.

“The sharp rise in polio cases this year is a reminder of the urgent need to protect every child with vaccines through campaigns and routine immunisation. While there is polio anywhere, every child will remain at risk until the virus is eradicated,” said the Unicef representative.

 

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IFC, local banks to provide $52.2mn financing for tyre production in Pakistan​

BR Web Desk December 23, 2024

The International Finance Corporation (IFC), a member of the World Bank Group, and a consortium of Pakistani banks, including HBL, Meezan Bank, Bank Alfalah and Habib Metropolitan Bank, would provide up to $50.2 million in financing to support Armstrong ZE Pvt. Ltd. in developing a greenfield tyre manufacturing facility in Pakistan.

According to a press release issued on Monday, the facility will be established in Gharo, Sindh to boost local tyre production.

“The financing comprises a $25 million loan from IFC alongside an up to $25.2 million equivalent investment in Pakistani rupees from local banks,” read the statement.

IFC said the project will introduce a locally manufactured international brand to Pakistan.

“The project is expected to create over 1,800 direct and indirect jobs and help increase the competitiveness of the sector through technology and know-how transfers,” it said.

 

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ADB urges steps for sustainable agri growth​

Amin Ahmed
December 29, 2024

ISLAMABAD: A recent study by the Asian Development Bank (ADB) has pointed out several policy measures necessary to promote sustainable agricultural development and improve farm performance in Pakistan.

The study, ‘Adoption of Farm Mechanisation for Clean Air’, says policies such as the Enhancing Technology-based Agriculture and Marketing (ETAM) developed with ADB technical assistance — which promotes mechanisation, improved cultivation practices and marketing linkages — need to be scaled up and incorporated in the mainstream.

These measures contribute significantly to achieving the country’s agricultural development goals by boosting productivity, reducing post-harvest losses, and increasing farmers’ income.

The targeted support mechanisms such as subsidies, credit facilities and capacity-building programmes could be designed to address the specific constraints and needs of smallholder farmers.

The effect of participation in the ETAM programme is stronger on larger farms than on smallholding farms. The reduction in harvest losses is three times higher on larger farms than on smallholding farms.

The heterogeneity analysis revealed that while the ETAM programme had a positive impact on all farm sizes, the benefits were more pronounced for larger farmers.

The results of the study underscore the importance of ensuring that mechanisation initiatives benefit all by providing tailored support to small farmers who often face limitations in accessing credit, extension services, and economies of scale.

Published in Dawn, December 29th, 2024