ADB Says Will Cut Aid If Pakistan Reforms Rreversed

August 28, 2002 - 0:0
ISLAMABAD -- The Asian Development Bank said on Monday it would cut its assistance to Pakistan if a civilian government formed after October polls reversed economic reforms of military ruler General PeMvez musharraf.

Musharraf, who seized power in a bloodless coup in 1999, has vowed not to allow the future government to undo his reforms and has extended his rule for five more years through a controversial referendum in April as a means to ensure that.

Marshuk Ali Shah, ADB's country director, told Reuters the bank's plan to provide $2.5 billion to Pakistan over the next four years to fight poverty under its country strategy and program could be at risk if reforms was undone.

"Our level of assistance definitely will come down." he said when asked what ADB would do in case of an attempt to reverse the reforms.

In a report distributed at the news conference, the ADB said it and other external financing agencies could make it more difficult for any future government to reverse the reforms by building the government's devolution plans and other key reforms into their assistance programs.

Shah praised the military government for "achieving macro-economic stability" since it came into power.

"This is why ... we have come to assist with such a substantial level of assistance. And we have been assisting the government to move forward and bring about the structural reforms in the economy," he said.

Shah's praise came after a mission of the International Monetary Fund last week gave the Pakistan economy a glowing review and urged any future government not to reverse policies put in place by the military leadership.

IMF officials said debt was becoming more manageable, economic growth had started to pick up, inflation was at a healthy three percent and the budget deficit was at a reasonable level.

The IMF approved a three-year $1.31 billion loan to Pakistan in December to help it battle poverty and offset the impact on its economy of the U.S.-led war in neighboring Afghanistan.