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ADB Approves $200 Million Package to Boost Social Services Delivery in Pakistan's Punjab Province

MANILA, PHILIPPINES (22 December 2004) - The Asian Development Bank (ADB) will help ensure the equitable and effective delivery of basic social services - including health, education, and water and sanitation - that have been devolved to the provincial government of Punjab, Pakistan, through an assistance package totaling US$200 million approved.

The Punjab Devolved Social Services Program will support critical reforms, institutional strengthening, capacity building, and partnership building in Punjab's social services.

The program aims to expand the coverage of health services, especially for women and children; increase school enrollment rates; and improve access to water supply and sanitation services in a province of an estimated 83 million people, accounting for more than half of Pakistan's total population.

It will also direct resources to programs and projects that have been identified and implemented in line with Punjab's Poverty Reduction Strategy Paper, medium-term budgetary framework, and other medium-term, province-level plans; help participating local governments to assume new roles and responsibilities as laid out by the Punjab Local Government Ordinance; enhance capacity at the province and local levels to involve stakeholders and civil society; and enhance capacity to monitor at all levels.

"Making special provision for protecting poor and vulnerable groups, the program will help Punjab achieve progress on the Millennium Development Goals related to poverty, gender, education, health, and water supply and sanitation," says Brajesh Panth, an ADB Senior Social Sectors Specialist.

"It will provide better access to health facilities for poor, rural populations, women and children; and create educational facilities for handicapped children and for girls in less affluent districts. Water supply and sanitation schemes will also mostly benefit small villages and neighborhoods."

Poverty, illiteracy and ill health are a major hindrance to economic progress and a source of social instability. Recognizing this, the Pakistan Government is pursuing an ambitious reform agenda aimed at putting the economy on a stronger and more stable footing.

Punjab's social indicators fall far short of its economic development. This is reflected in low literacy rates; high infant, child, and maternal mortality rates; susceptibility to communicable diseases; low proportion of deliveries by trained birth attendants; and great disparity among income and gender groups in access to social services; and inadequate sanitation and solid waste management.

The Government initiated a sweeping and complex devolution program in 2001, which included devolution of social services, including health, education and water supply and sanitation, to local governments. But the government of Punjab is short of resources in relation to its large socioeconomic needs. The overall cost of reforms is estimated at $200 million.

ADB will provide financial assistance amounting to $180 million equivalent, through two loans and a grant.

A $75 million loan comes from the concessional Asian Development Fund and carries a 24-year term, including a grace period of eight years. Interest is set at 1% per annum during the grace period and 1.5% per annum for the rest of the term.

A second $75 million loan comes from ADB's ordinary capital resources, with a 15-year term, including a grace period of three years. Interest is determined in accordance with ADB's LIBOR-based lending facility.

The Government of the United Kingdom through the Department for International Development (DFID) will also provide a grant of $30 million, to be administered by ADB.

The Planning and Development Department of Punjab is the executing agency of the program, which is due for completion in March 2008.

In addition, the Punjab government will receive a TA grant of US$20 million from DFID to strengthen sector and program management and monitoring, support policy reforms, and boost social sector governance and development of local governments. The Punjab government will provide $5 million toward the TA's total cost of $25 million. The grant will be utilized over four years.

ADB is dedicated to reducing poverty in the Asia and Pacific region through pro-poor sustainable economic growth, social development, and good governance. Established in 1966, it is owned by 63 members - 45 from the region. In 2003, it approved loans and technical assistance amounting to US$6.1 billion and US$177 million, respectively.

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