ADB Releases $150m Second Tranche To Punjab

The Asian Development Bank (ADB) on Wednesday released the second tranche amounting to $150 million of its public policy support loan for Punjab.

The loan is meant to support public policy reforms designed to boost inclusive growth and improve the delivery of public services in the province. The loan agreement was signed on Sept 17.

The bank has already released the funds to the federal government, which will transfer the money to the province in a few days,” a provincial government official told Dawn.

He said the Punjab Resource Management Programme (PRMP), the flagship governance and financial reforms programme created by the provincial government with the ADB assistance, had completed all the conditions and implemented the entire set of reforms within the stipulated time frame to ensure the timely release of the tranche.

The much-needed ADB funds will help the provincial government finance its development.

The ADB loan is part of a five-year $750 million development policy loan (DPL) agreed between the ADB and Punjab in 2007. The first tranche of the loan amounting to $250 million was released to the province in January 2008. The loan is divided into two parts: funds for subprogram II of the Punjab Government Efficiency Improvement Program (PGEIP) include $75 million from the ADB’s ordinary capital resources (OCR), and a further $75 million from its concessional Asian Development Fund (ADF). 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 publicprivate partnerships for infrastructure and social services. A key element of the second phase of the programme is the introduction of results-based management for the first time in Pakistan.

The adoption of results-based man agement will transform public sector management from micro control to a greater focus on results and will modernise government operations in Punjab. 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 eightyear 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 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 | Thu, Oct 1, 2009 |