Accelerating Economic Transformation in Pakistan

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Accelerating Economic Transformation in Pakistan

ADB attaches conditions to $500 million loan

Tuesday, March 30, 2010
By Aftab Maken

ISLAMABAD: The ADB has attached a number of conditions with the future lending of $500 million under Accelerating Economic Transformation in Pakistan (AETP) Subprogram-3 in horticulture, textile and other industrial sectors.

The Bank suggests that the government should introduce new screening mechanism of industrial support projects in Planning Commission and Ministry of Finance and enhance awareness of best principles of industrial support and introduce performance auditing, reveals a presentation of the Bank and available with The News on Monday.

To upgrade the textile and garment sectors, the ADB further said that cabinet committee on textiles should approve the use of best principles for implementing textile policy 2009-14. Also higher incentives and support given to encourage production and export of sophisticated products and effective implementation for modernizing centres of excellence, strengthening RDA cell and training of 500,000 stitchers in garments and apparel sectors, it added.

The Bank proposed that the government should develop standards for exports of main horticulture products approved and action initiated to develop PakGap and also cabinet should issue a policy statement on principles of contract farming in the country.

The Bank advised that the government should establish an “export diversification facility” within the Business Support Fund by restructuring it and funds allocation for first 4 Pilot Dialogue for Structural Transformation).

The Asian Development Bank has proposed a policy matrix of $500 million under Accelerating Economic Transformation in Pakistan (AETP) Subprogram-3 to modernize and diversify the economy in the next 15 years.

The program also envisaged that the export will triple from $20 to $60 billion whereas the textile exports will also increase from $13bn to $21bn, said the ADB presentation to the ministry of Finance.

Although the share of textiles and garments exports will decline to one third of the total export, yet the share of textiles and garments of very low sophistication will also decline from 55 per cent to 17pc, while that of high and very high sophistication will increase from 10pc to 20pc, said the presentation adding that the overall level of sophistication of Pakistan’s exports will increase by 30pc and it will also lead to higher growth.

An additional $350 million in ADB loans helped Pakistan move to more market-based pricing of wheat and electricity remove subsidy distortions and improve targeted social safety nets. It also improved the bankability of the energy sector by resolving long-standing accumulated debt and attracting much needed investment. AETP2 also help Pakistan strengthen financial intermediation.

http://www.thenews.com.pk/daily_detail.asp?id=231586