AIIB considering US$1 bn for critical infrastructure projects in Pakistan

The Asian Infrastructure Investment Bank (AIIB) is contemplating provide Pakistan with US$1 billion for investment in critical infrastructure projects in the transport, urban and rural water and energy sectors, says Head of Communications Laurel Ostfield while launching the first bank report in the country..
The bank, he revealed had approved US$400 million for two projects. More than $1 billion investment in critical infrastructure projects in the transport, urban and rural water and energy sectors in Pakistan is under consideration. This support is aimed for four proposed projects.
The Board of Directors of the bank has already approved $ 100 million for the National Motorway M-4 Project and $300 million for Tarbela 5 Hydropower Extension Project, she said.
In alignment with AIIB’s strategic priorities–sustainable infrastructure, cross-border connectivity and mobilizing private capital to date $ 400 million are approved for Pakistan. “We are working to identify projects with high levels of readiness and that help address the needs associated with ageing water and transmission infrastructure.”
“Our focus will also remain on projects that can be carried out on a sound economic basis and contribute towards Pakistan’s long-term economic development,” she said.
Some of the projects under consideration include $100 million for the Karachi Bus Rapid Transit Project, $ 402 million for the Rawalpindi Ring Road Project, $400 million for the Lahore Water and Wastewater Management Project and $160 million for the Karachi Water and Sewer Services Project, Laurel Ostfield said.
According to the inaugural Asian Infrastructure Finance report, there continues to be significant infrastructure investment opportunities across Asia, including in Pakistan, despite current market uncertainty and short-term challenges. An increase in borrowing costs is expected in the next 12 months due to interest rate pressure and monetary policy announcements by the Pakistani central bank. The report notes that currency volatility could also affect project financing.
As governments grapple with the need for macroeconomic stabilization and sustaining a high level of infrastructure investment to meet growing demands, AIIB is eveloping strategies to help its members respond to short and long-term challenges in infrastructure development.
“Our focus on Pakistan demonstrates that during times of macroeconomic uncertainty, multilateral development banks such as AIIB can help reinforce sound public infrastructure investment,” said Dr Jang Ping Thia, Principal Economist. “Our report argues that MDBs will play a critical role in mobilizing private capital not just through co-financing but also to improve project preparation and to reduce project risks. This is why AIIB will remain a vital infrastructure partner for Pakistan.” He said that beside infrastructure development, Pakistan has one of the highest hydro potential in the world. The agriculture and industrial sector also offer great opportunity for investment. Replying a query regarding the interest rate on the AIIB loans, he replied that it will be around the same as charged by other lenders. He said that the AIIB doesn’t give budgetary support to its member countries.n