US Plans $5bn Help To Boost Pakistani Economy

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US plans $5bn help to boost Pakistani economy By Anwar Iqbal
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Tuesday, 03 Mar, 2009 06:26 AM PST WASHINGTON, March 2: Providing economic assistance to Pakistan is high on the priority list of the US administration and lawmakers who also are considering a proposal to give a one-time assistance of $5 billion to help stabilise the Pakistani economy, diplomatic sources told Dawn.

The additional aid – according to these sources – will be attached to a package proposing an annual assistance of $1.5 billion over the next five years. The package can be extended for five more years with congressional approval.

The sources said that the Pakistan aid package could be introduced in the US Congress later this month.

Another bill to set up reconstruction opportunity zones (ROZs) along the Pak-Afghan border my also be introduced some time this month.

Senator John Kerry, who co-sponsored the aid package, released a report last week proposing an immediate injection of about $5 billion into the Pakistani economy to prevent an imminent meltdown.

The report warned that “the Pakistan government has between 6-12 months to put in place and implement security and economic policies or face the very real prospect of considerable domestic and political turbulence”.

Apparently, the Obama administration agrees with this assessment and wants to move rapidly to protect the Pakistani economy from a possible collapse. It is also working with the Pakistani government to bring political stability to the country.

The proposed $5 billion, however, will not go directly into the government of Pakistan funds. The money will be spent on projects supervised by the US Agency for International Development.

The supervision will ensure that the money is spent for the purpose it is given and will reduce the chances of corruption and misappropriation. But this will also increase the overhead expenses to 25 to 30 per cent, running into hundreds of millions. The USAID is required to hire US contractors who then can hire Pakistani sub-contractors to work on the proposed projects.

The entire aid package, which may go up to $15 billion if extended for 10 years, will focus on the economy and social sectors.

The ROZ bill is likely to be adopted before the aid package. Once the bill is adopted, the US administration will work with the Pakistani and Afghan governments for designating the zones.

The government of Pakistan will then be required to announce an incentives package for the tribal areas.
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