The Asian Infrastructure Investment Bank is considering putting $100 million in the Karachi Bus Rapid Transit project and $160 million in the Karachi water and sewage services project to cofinance them with the World Bank and Asian Development Bank.
This is part of a one-billion-dollar investment in critical infrastructure projects in the transport, urban and rural water and energy sectors in Pakistan. Some of the other projects under consideration include: $402 million for the Rawalpindi Ring Road Project and $400 million for the Lahore Water and Wastewater Management Project.
To date, the AIIB has approved $100 million for the National Motorway M-4 Project and $300 million for Tarbela 5 Hydropower Extension Project.
“We are working to identify projects with high levels of readiness and that help address the needs associated with ageing water and transmission infrastructure,” said AIIB Head of Communications Laurel Ostfield, according to a press release issued Thursday, Jan 31 after a press conference in Islamabad. “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.”
According to the inaugural Asian Infrastructure Finance report there continue 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 developing 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 cofinancing but also to improve project preparation and to reduce project risks. This is why AIIB will remain a vital infrastructure partner for Pakistan.”
Pakistan-specific highlights and the full report can be found at aiib.org/aif