ADB may extend $600 million assistance to Afghanistan

Asian Development Bank (ADB) was planning to extend $600 million assistance to Afghanistan over the next three years.
This was stated in the Country Strategy and Programme (CSP) update for 2004-2006 endorsed by ADB's Board of Directors.
According to sources, the loan pipeline, prepared in collaboration with the Afghan Government, totalled $570 million over the three years for 12 programmes and projects, from ADB's concessional Asian Development Fund (ADF).
Afghanistan's status as a post-conflict country allows for up to 50 percent of this allocation to be provided in the form of grants. Additional grant assistance amounting to $30 million would come from the ADB's technical assistance special fund. The final lending allocations over the period would depend on country performance and resource availability.
The sources averred that CSPs define ADB's medium-term development strategy as agreed with the country. A CSP update was prepared every year taking into account the continued relevance of the CSP, its implementation, and ADB's operational program for the next three years.
The update stated that Afghanistan had made good use of aid and was making good progress in recovery and rehabilitation after two decades of war and internal strife. However, reconstruction and development would occur over a much longer horizon, requiring a fairly large lending program.
According to them, the three-year programme would thus continue to support economic growth, poverty reduction, and reconstruction and development. The ADB was following a three-pronged approach for supporting Afghanistan's reconstruction, building capacity, establishing an appropriate policy and institutional framework, and rehabilitating essential infrastructure.
The 12 projects and programmes planned during the period span five sectors, including natural resources totalling $95 million, transport totalling $235 million, energy totalling $100 million, financial sector totalling $85 million and public sector totalling $55 million.
The ADB also supported the government strategy of promoting a private sector-led economic recovery. Depending on the progress of discussions with the Afghan government and co-financiers, the ADB could invest in the energy and transport sectors as well as in bank and non-bank financial institutions to develop Afghanistan's financial sector. ADB private sector investments were expected to catalyse investments of about $240 million in 2004 and $450 million in 2005, they added.
According to the sources, to complement lending assistance, the ADB also planed a grant programme amounting to about $10 million per year in support of capacity building and policy reforms in key sectors.
Some 36 activities were in the TA pipeline totalling $63.6 million, of which $33.6 million would be raised from grant co-financing. Other pilot activities might be financed by bilateral and multilateral sources to cover renewable energy and bio-diversity management, and grant funded pilot efforts linked to loan financed projects.