Countries and Regions

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p. 3 of 4 BACK | NEXT I. Current Development Trends and Issues II. Implementation of the Country Strategy and Program III. Portfolio Management Issues IV. Country Performance and Assistance Levels

Country Strategy and Program Update 2005-2006: Pakistan

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III. Portfolio Management Issues

A. Portfolio Performance

23. As of 31 December 2003, ADB had approved a total of 202 loans for Pakistan for a principal amount of $12.45 billion. ADB had also provided support for 271 TA projects for an approved amount of $114.8 million. ADB’s cofinancing activities in Pakistan include $699 million of commercial cofinancing, $247 million of export credit-related cofinancing, and more recently, political risk guarantees have been issued in the amount of $475 million and a partial credit guarantee has been approved for $65 million. As of 31 December 2003, 56 public sector loans covering 38 projects were under implementation, of which 83% loans are rated satisfactory (Appendix 1, Table A1.9). Also under implementation were 60 TAs worth a total of $33.6 million.

24. Contract awards for ADB projects in Pakistan have averaged $410 million annually over the past 5 years. Overall disbursements have averaged $496 million annually during the same period, of which disbursements for policy-based operations have averaged $244 million. In 2003, the actual contract awards amounted to $501 million or 127% of the annual projection, and disbursements to $466 million or 133% of the annual projection. Some portfolio indicators showed a decline in 2003. The overall contract-award ratio of 13.9% in 2003 (9.4% for project loans) was marginally lower than the ratio in 2002 (14.1%), but the contract-award ratio for project loans showed significant improvement from last year (6.6%). The contract-award ratio in 2003 was also lower than the corresponding ADB-wide average ratio of 17.3% (14.6% for project loans). The disbursement ratio of 16.5% in 2003 (8.6% for project loans) was lower than that for 2002 (23.2% overall and 13.7% for project loans) as well as the ADB-wide average of 20.2% (17.1% for project loans) (Appendix 1, Table A1.7). The number of loans at risk increased to 10 compared with 9 loans of 2002⁵ (Appendix 1, Tables A1.6 and A1.9).

B. Performance Monitoring and Evaluation

25. The low contract-award and disbursement ratios noted above are partly a result of the weight of the large number of new loans (35) included in the portfolio during 2001-2003. However, these are also a consequence of start-up delays in project implementation and, along with the increase in the number of projects at risk, indicate that project implementation capacity in Pakistan needs to be strengthened. The 2003 country portfolio review mission identified both short- and medium/longer-term actions to improve portfolio performance. The short-term measures included minimizing turnover of project directors and staff; closing loan accounts of seven loans; and improving contract award, disbursement, and imprest account turnover ratios. The medium/longer-term measures included executing agencies’ establishing core project management units (CPMU) before ADB processes loans, training PMU staff in ADB procedures through workshops, operationalizing new imprest account procedures, introducing financial management systems in PMUs, and strengthening monitoring and evaluation procedures.

26. To intensify project implementation efforts, PRM continued with the provincial portfolio review meetings (PPRMs) that were initiated in 2001. Agreements were reached in these meetings with the government on timebound action plans to resolve issues including staffing of PMUs, timely action on procurement and award of contracts, release of counterpart funds, early operationalization of facilities constructed under projects, outstanding audit issues, and timely closure of loan accounts. During 2003, PRM conducted five workshops on portfolio management and project implementation for executing agencies and project directors. The other initiatives to enhance the government’s capability include TAs entitled (i) Strengthening Monitoring and Evaluation Capacity and (ii) Improving Financial Management Capacities of Project Management Units.

27. The Operations Evaluation Division has carried out four evaluations since CSP approval. In August 2002, evaluation of the Second Barani Area Development Project found the project partly successful. In January 2003, evaluation of the Selected Advisory Technical Assistance for Capital Market Development in Pakistan rated the cluster of six TAs successful. Also in 2003, the Population Project was rated as successful, but the Livestock Development Project was found to be unsuccessful.

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