ADB provides $500 million for poverty safety nets

ISLAMABAD: The Asian Development Bank would provide $500 million to Pakistan to assist the government in macroeconomic stability efforts and fund a targeted safety net program for the poor.

In this regard, the ADB and government signed an agreement for two loans to Pakistan totalling US$500 million here on Friday, APP reports.

The US$500 million approved by ADB’s board yesterday known as AETP2, is the second sub-program of the Accelerating Economic Transformation Program (AETP).

The loans support short- and medium-term reform actions being taken by Pakistan’s government in response to the global economic and financial crisis.

The loans also carry forward measures enacted by the government in 2008 to cushion the impact of skyrocketing global fuel and food prices.

Under AETP2, a loan of $150 million from ADB’s Special Fund will target the Benazir Income Support Program (BISP), a cash transfer program focusing on poor women.

Under the scheme, the female head of qualified families receives 1,000 rupees per month to help defray the rising cost of food and other household expenses.

Created in October 2008, the BISP social safety net program is expanding its current coverage of 3.5 million families to five million families next year and aims to reach seven million families by 2011.

An additional $350 million in ADB loans will help Pakistan move to more market based pricing of wheat and electricity and remove subsidy distortions, while improving targeted social safety nets, resolve long-standing accumulated debt in the energy sector to improve the bankability of this sector, and attract much needed investments.

AETP2 will also help Pakistan strengthen financial intermediation.

‘The AETP2 program will benefit millions of poor and vulnerable families through targeted cash allocations, and by removing poorly targeted subsidies in the wheat and energy sectors, while freeing up much needed funds for development,’ said Rune Stroem, Country Director of ADB’s Pakistan Resident Mission.

‘These targeted interventions will help enable Pakistan to meet its urgent social and developmental needs in FY2009,’ Stroem added. link.....