ADB Approves $120 Million Loan to Help Spur Growth in Pakistan's Sindh Province

MANILA, PHILIPPINES - The Asian Development Bank (ADB) is extending fresh funds for an ongoing program to help Pakistan’s Sindh Province boost growth and expand economic opportunities in poor, rural areas.

The Board of Directors today approved a $120 million equivalent loan from ADB’s concessional Asian Development Fund for the second phase of the 3-phase Sindh Growth and Rural Revitalization Program. The program supports the provincial government's drive to reduce poverty and stimulate economic growth by improving management of public spending, and enabling higher private sector participation in the economy.

Sindh has about a quarter of Pakistan’s population and generates a third of its gross domestic product. Karachi, its capital city, is the financial hub of not only Sindh but also Pakistan. However, there is an economic urban-rural divide; dwellers in the countryside amongst the poorest in Pakistan, with high rates of malnutrition and maternal and infant mortality.

“The program helps increase private sector participation in the Sindh economy, to drive broad-based growth across the province,” said Yesim Elhan-Kayalar, Senior Economist in ADB’s Central and West Asia Department.

The second phase of the program supports a broad range of government reforms to spur growth, including the development of a legal, institutional and regulatory framework for public-private partnerships, increased private sector representation and introduction of market-based principles to management of agriculture and industrial state owned enterprises, ensuring land is a marketable asset by computerizing land titles, and the corporatization of public agriculture and produce markets. It also helps the government improve the management and targeting of public resources.

Women in Sindh suffer from a lack of access to health services, employment and other opportunities, and the program has a strong focus on incorporating gender priorities into policy- making and the development agenda in Sindh. As a result of the program, the government now includes a Women Development Secretary on the Provincial Development Working Party, ensuring gender inputs into policy making, investment decisions on public spending, and project implementation. In addition guidelines have been drawn up to ensure that all public project proposals assess impact on women, explore employment opportunities for women, and public private partnership projects pursued by the provincial government deliver benefits to both men and women.

Provincial government resources in Sindh are limited, and the economic crisis has constrained federal support, so ADB’s loan will allow it to advance its development agenda in areas covered by the program over the next two years. The loan has a term of 24 years, including a grace period of 8 years with an interest rate of 1% per annum, rising to 1.5% for the rest of the term.

The Sindh Planning and Development Department is the executing agency for the program, which includes a third, and final phase, due for completion in December 2011.