The Federal Finance Minister Ishaq Dar's June invitation to the Asian Development Bank (ADB) President Nakao unfortunately materialised during the ongoing sit-ins in Islamabad. The scenario prompted the visitor to acknowledge that while he did not have any estimates of the impact on the economy of the political impasse yet he would assume that the more prolonged the protest the greater the damage. Those who may think that the timing of the visit allowed Nakao to see first-hand the destruction wrought by floods, would be surprised to learn that he did not visit any flood-affected area. He gave a standard normal response when asked if the Bank would extend any assistance for flood victims: an assessment of needs would first be carried out after which the Bank would determine how much assistance to extend.
What is, however, particularly disturbing about the entire visit was the way it was handled by the Ministry of Finance media cell. A press release issued by the Ministry on the day Nakao arrived in the country and met with Dar maintained that the President indicated the Bank's willingness to extend funds for the construction of Diamer-Bhasha dam. The following day when directly asked to confirm whether the Bank would extend assistance for the Diamer-Bhasha dam by the local media, Nakao responded that ADB may be in a position to play the lead role in a consortium for financing the dam if and when such a consortium was set up. Whether the lead role would involve actual funding was not disclosed. It is simply inexplicable why the Finance Ministry felt compelled to release a statement attributed to the President of ADB when it was not likely to be confirmed by the Bank itself.
Additionally a report released by a government news agency revealed that a 200 million dollar loan for the 59-kilometre Hassanabdal-Burhan-Havelian Expressway was signed between the Bank and the government. Surely the pundits in the Ministry must be aware of the fact that presidents of multilateral banks, quite unlike heads of government like Chinese President Xi Jinping, cannot simply announce a loan for any sector at their whim. The approval of any loan undergoes a lengthy procedure that involves fact-finding missions as well as missions that seek to get government and stakeholder approval prior to the proposal being presented to the Bank's President. If approved, the project then has to be approved by the Board. In other words, the 200 million dollar was not contingent on President Nakao's visit and would have, regardless of the visit, been signed between the Bank and the Economic Affairs Division.
Nakao also stated that the Bank would be able to lend only one billion dollars for development projects inclusive of the Benazir Income Support Programme. Again once a country programme document has been finalised detailing exact financial support for specific projects in specific sectors for three years and agreed between the bank staff and the government, a multilateral president cannot change it during a visit.
Be that as it may, the ADB chief, as expected, did extend support to the country's macroeconomic performance and stated that "we are seeing the growth rate is picking up, inflation is becoming more managed and foreign reserves have picked up and the exchange rate is becoming stable so it is really a remarkable achievement by the government". However, the IMF staff maintains that the government's focus is on the nominal as opposed to the real exchange rate. This has negatively impacted on exports, and economists are challenging the data presented by the Pakistan Bureau of Statistics and maintain that reserves have picked up because of borrowing from abroad entailing exchange risk for the country over the next three to four years. But then again a multilateral is not in the business of publicly challenging a government's claims and focuses on behind the scene discussions.
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