The cancellation of $400 million interest-free loan comes as a severe blow to the Punjab government, which is already facing financial crisis. The government is having difficulty in meeting the requirements of the Annual Development Programme (ADP) announced in the 2008-09 budget, as caretaker government did not pursue it properly.
The Asian Development Bank (ADB) which has cancelled an interest-free $400 million loan for the Punjab Local Justice Programme (PLJP), putting the programme in jeopardy, sources told on Friday.
The PJLP aims to improve the provision of justice in the province. The Punjab government was scheduled to launch the PLJP in the second half of 2008 for tangible improvement in the judiciary, police, prosecution and prison sectors.
The three-year plan includes soft and hard policy initiatives of the Punjab Planning and Development Board. The soft reforms include new legislation and the establishment of services structure and accountability mechanism in the judiciary, police, prosecution and prisons departments. The plan's physical reforms include the development of infrastructure, computerisation of offices and construction of new buildings.
The PLJP also aims to establish a Punjab Forensic Science Agency and a Judicial Academy. Negotiations on the loan started in 2007. The ADB wanted solid commitment from the government on taking up the governance reforms, which went well in 2007, but in 2008, the negotiations could not go ahead because the officials concerned did not pursue it properly, the official said.
The loan was part of a loan package consisting of the Millennium Development Goal Loan (MDGL) and the Punjab Resource Management Programme (PRMP) Phase-II loans. Due to an acute shortage of funds, the government has only released 25 percent of the ADP to the departments concerned and 40 percent of the current expenses to pay salaries, pensions and similar 'running' expenses. The ADB's refusal to provide a soft loan to Punjab will also damage the government's repute among international donor agencies.
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