ADB to give $2b to propel Pakistan economy

The implementation on first phase of the plan has already been started, which paved the way for release of US $500 million on September 30. The major crux of the first phase was eradication of subsidies and addressing food and energy crisis. The ADB has convinced the government to give targeted subsidies to the poor instead of mismanaged ones, said the Finance Ministry sources who were part of the negotiating team.

Its second leg is stretched from October 2008 to June 2009, which would further strengthen first phase reforms and after that Pakistan would be able to get another US $500 million before the end of the fiscal year 2009, said the sources.

A senior official of Economic Affairs Division told TheNation that the government would try to convince the Manila-based agency to release the tranche in the third quarter to ease some pressure on external front. The next two sub-programmes are expanded between July 2009 and June 2011 and with that initial phase of structural reforms would be completed, the Finance Ministry sources added.

Overall the reforms process is divided into two broader categories of shot-term and medium to long-term structural reforms. In short-term the government would correct the immediate distortions facing the economy with the help of international development partners.

It also envisages strengthening of financial markets to facilitate the process. In the medium to long-term, the production and trade structures of the economy will be reformed.