In a meeting with Vice-President Xiaoyu Zhao and Director General, Juan Miranda of the Asian Development Bank (ADB) on 25th August, 2011, Prime Minister Syed Yousuf Raza Gilani asked for the provision of financial resources that are not likely to be made available to the country under any circumstances.
He called upon the ADB to finance the mega project of Bhasha Dam, construction of which could solve the country's chronic energy crisis and also provide sufficient water to the agriculture sector that holds the key to food security of Pakistan. He also emphasised ADB's support for construction of a motorway from Karachi to Faisalabad, which is the hub of textile industry of the country. In addition, the Prime Minister sought ADB's assistance for construction of roads through Central Asia Regional Co-operation Funds for integration of Pakistan with Central Asia.
On the face of it, Prime Minister's meeting with the officials of the ADB would look like a routine affair and hardly noticeable for any serious exchange of views about major issues of the economy. However, seen closely, it betrays the level of apathy on the part of the government bureaucracy to brief the Prime Minister properly so that such occasions could be used more productively to enhance the country's economic interests. The sad part is that our political leaders of highest standing are also not sufficiently aware to make the right impact in such meetings.
For instance, there was no way the ADB would provide the level of resources which would even partly finance the construction of Bhasha Dam, motorway between Karachi and Faisalabad and a road network to connect Pakistan with the Central Asian states. This is because Pakistan, like other countries, has to follow a prescribed reform agenda for proper economic management. Such an agenda is not meant to punish a country but to stabilise and revive its economy on a sustainable basis.
More importantly, the agenda to be followed is generally the common property of the IMF, the World Bank and the ADB and any deviation from the prescribed path invokes the ire of all the three institutions. To cite an example, Pakistan's SBA with the IMF remains suspended due to violation of certain agreed conditionalities and there is no immediate likelihood of its resumption. Also, there is no possibility of negotiating any other programme with the IMF in the foreseeable future because of Pakistan's reluctance to agree to strict conditionalities and the country's comfortable foreign exchange reserve position at the moment which could allow it the luxury to remain non-committal for sometime.
Anyhow, the point to be highlighted was that ADB was not likely to extend further resources to Pakistan unless the country was able to negotiate another programme with the IMF or the IMF was at least prepared to issue a letter of comfort about the appropriateness of economic policies of the country. In a situation like this, if Pakistan feels that the projects proposed to be taken in hand were critical for the economy, it was essential for the country to raise more domestic resources and implement the kind of policies, which were expected to be viewed favourably by the multilateral financial institutions.
Since these conditions are not likely to be met anytime soon, pleadings of the Prime Minister for more assistance from the ADB are likely to fall on deaf ears and would not draw a positive response. The Chief Executive of the country, in our view, should not be put into a position where his words don't carry weight. The visiting ADB officials were probably right in offering only brief formal remarks on the occasion and avoiding comments on the financing of the suggested projects.
A lot of issues have to be sorted out before Pakistan could expect an enthusiastic and favourable response from the multilateral financial institutions and the international community to increase the level of assistance in a significant manner. In the meantime, the Prime Minister of the country could be requested to treat the meetings with the visiting officials as just courtesy calls and not to pin high hopes on their usefulness.