ADB Okays $150m for Punjab Public Reforms

The Asian Development Bank (ADB) has agreed to give $150 million to Punjab to support its public policy reforms in the province designed to boost inclusive growth and improve the delivery of public services.

The ADB funds, expected to be released over the next several days, will help the Shahbaz Sharif government help finance its development budget and overcome its financial woes, at least for the time being.

The loan is part of a fiveyear $750 million development policy loan (DPL) agreed between the ADB and Punjab in 2007. The first tranche of the loan amounting $250 million was released to the province in January 2008.

The loan is divided into two parts: funds for sub-programme II of the Punjab Government Efficiency Improvement Programme include $75 million from the ADB’s ordinary capital resources (OCR), and a further $75 million from its concessional Asian Development Fund (ADF), according to an official of the Punjab Resource Management Programme (PRMP), which is overseeing public policy reforms in the province.

The agreement for the release of the funds between the ADB and the provincial government was signed on Thursday in Islamabad by Economic Affairs Division Secretary Farrakh Qayyum and ADB Country Director Rune Stroem. “The new loan will support reforms that strengthen public financial management through the introduction of output-based budgeting, improve the efficiency and accountability of the civil service, boost the affordability and sustainability of the public pension system, and promote public-private partnerships for infrastructure and social services,” a handout issued by the ADB said.

A key element of the second phase of the programme is the introduction of resultsbased management for the first time in Pakistan.

“The adoption of resultsbased management will transform public sector management from micro control to a greater focus on results and will modernise government operations in the Punjab,” said Xiaoqin Fan, a senior economist for Public Financial Management in the ADB’s Central and West Asia Department.

The programme also supports the allocation of more resources for gender reforms and capacity building to address current gender inequality in key sectors.

The OCR loan has a 15-year term with a grace period of three years, and interest charges set according to ADB’s Libor-based lending facility.

The ADF loan has a 24-year term with an 8-year grace period carrying an annual 1.0 per cent interest charge, rising to 1.5 per cent for the balance of the period.

The full programme cluster which has three separate phases runs from July 2006 to around March 2011.

The PRMP official said the Punjab government, with the assistance of the ADB, had initiated the second phase of reforms under the PGEIP, which was a policy and governance reforms programme aimed at improving institutional development, public financial management and private sector participation.

DAWN | LAHORE | Fri, Oct 18, 2009 |