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$6 billion ADB loan

$6 billion ADB loan

The Asian Development Bank has recently approved a $6 billion loan programme for Pakistan to complete various infrastructure projects in the country. The programme, which is spanning over five years’ time period, covers construction of Motorway, improvement of railway tracks and construction of a 660-megawatt coal power project in Jamshoro. Pakistan is facing an annual shortfall of around 4,000 megawatts electricity in June and July every year and addition of 660-megawatt in the system will improve the energy situation to some extent. At least $300 million will be spent on some Public Sector Enterprises in next two years. The government is already injecting billions of rupees in Pakistan Railway, Pakistan Steel Mills, Pakistan International Airline and several other entities without any improvement in the situation. Experts believe the latest loan will be wasted away on futile exercises and the nation will have to pay the debt for years. The government had earlier purchased dozens of locomotives from China most of which have been nonoperational for the last many years, but the nation is embroiled in debt servicing.

The opinion of the donor agencies also varies on the issue of privatization of the loss-making entities and the government is also under pressure due to political reasons. There is a need to take tough decisions and decisions should be made after thorough discussions involving all the stakeholders in the matters. Fortunately, the National Assembly and Senate are intact and there should be an open discussion on the issue. Earlier, the government’s bid to privatize PIA backfired and two precious lives had lost in the chaos when employees of the national carrier went on strike in protest against the privatization. The government finds it an easy way to get foreign loans and maintain a kind of status quo without realizing that makeshift arrangements are adding burden of loans on the nation. The government will have to improve its performance to spend the loan amount in proper manners. According to some sources, the railway department has already signed a contract with a US firm to overhaul the damaged engines. But around one year has passed, not a single engine is ready to come on the track.

According to the ADB, the liabilities of the Railways have been piling up mostly due to poor administration and poor financial management. The bank is ready to invest in the department but it is the management which has to work out a plan to spend the loan and avoid wastage of public money. The federal government owns 191 public sector organizations worth Rs 9.4 trillion with more than 420,000 workforce, 78,000 of which are working in the railway alone. Unfortunately, assets are becoming liabilities and there is no light at the end of tunnel. One does not hope any good from the current approval of loan.