ADB loans Pakistan US$400m to rebuild quake-damaged homes
|The Asian Development Bank (ADB) will provide Pakistan's government with a US$400 million soft loan to rebuild homes hit by the 2005 earthquake – a new push to house some 30,000 people still living in tents and 3.5 million others in non-permanent dwellings. |
The new loan, approved by ADB's Board of Directors on Wednesday, is part of a US$1 billion pledge ADB made after the 7.6-magnitude quake on 8 October 2005, which killed about 80,000 people.
"With the last two winters having been extremely harsh, ADB is fully supportive of the Government's push to make the upcoming winter the last one without proper homes for most of those displaced by the quake," said C.C. Yu, the ADB Mission Leader. "We are moving this forward as fast as possible."
The injection of funds will be a boost for the region's economy. It will create jobs for reconstruction workers and help businesses supplying reconstruction materials.
In addition to the new loan, ADB will provide a US$2 million grant to increase the capacity of Pakistani institutions helping rebuild quake-affected areas. It will provide training in seismic construction, strengthen financial and strategic management, and support environmental and social protection.
The loan will be released in two parts. The first tranche of US$200 million will provide support on a retroactive basis for the significant housing expenditures already incurred by the Government. The second tranche, expected to be released within six months of the first, will be used to meet the additional financing needs of the housing reconstruction program.
Home owners will be given money directly to repair or rebuild their own homes in accordance with approved designs to make them more resilient to earthquakes in the future.
People whose homes have been completely destroyed will receive a total of about US$2,900 over four installments. For a partially damaged house, the owner will receive nearly US$1,230 and for houses with minor damage about US$410. The payments will be made based on progress reports from field inspections by appraisal teams with representation from local government, communities, Pakistan Army and non-government organizations.
An extra about US$1,230 will be provided to about 6,000 households, whose land was destroyed by quake-triggered landslides, to acquire new land to rebuild their homes.
The new loan is the latest in a long list of funding ADB has provided toward the reconstruction effort. Within three months of the quake striking, ADB had already approved US$405 million. This was followed by a US$5 million grant, US$12.5 million increase in financing and US$62.5 million reallocation of loan savings from other projects. In addition, ADB has helped mobilize about US$97 million in additional grant funding.
The new US$400 million loan carries an interest rate of 1% per year and a maturity of 40 years, including a grace period of 10 years.
Flying by helicopter over the quake-damaged town of Muzaffarabad, the first signs of reconstruction are the new shiny tin roofs that reflect the bright mountain sunlight. Then, as the aircraft descends, other things come into view - the building sites, the roads bustling with activity and new homes where there used to be ruins.
Eighteen months after the 7.6-magnitude quake killed about 80,000 people, Muzaffarabad, which was close to the epicenter of the temblor and suffered some of the worst damage, is coming back to life.
"We believe it is best to move ahead as fast as possible with our earthquake assistance," Asian Development Bank Vice President Liqun Jin said in a meeting in Muzaffarabad on April 25 with Sardar Attique Ahmed Khan, the Prime Minister of Azad Jammu and Kashmir (AJK).
ADB pledged $1 billion toward reconstruction efforts in Pakistan after the quake struck on Oct. 8 2005 and has already disbursed $183.8 million of its first assistance package of $300 million. On June 27, ADB agreed to another $400 million in new concessional loans.
To promote effective coordination between the Government, ADB and other development partners, the Manila-based development bank on April 25 opened an Extended Mission office in Muzaffarabad. It's the first of its kind in Pakistan for ADB.
"The Extended Mission exemplifies the importance that ADB attaches to the earthquake reconstruction and rehabilitation activities within affected areas and its continued support to the Government to manage the earthquake activities with due diligence," Mr. Jin said in a speech at the opening of the new office.
With cold winters in the mountains freezing the ground and making it impossible to continue reconstruction for about half the year, Mr. Sardar Attique said he had work crews doing 16-hour shifts during summer months.
"People here thought they could get back to their normal lives a few weeks or months after the earthquake," he said. "But I keep telling them that it will take 10 to 12 years. We are telling our people not to be impatient."
Juan Miranda, Director General of ADB's Central and West Asia Department, told Mr. Sardar Attique that ADB was also working to rehabilitate the local economy, as well as financing the reconstruction of buildings, roads and other physical infrastructure.
"We will be here for the long haul," he promised.
About $72 million of the money ADB has already disbursed is being used for rebuilding schools and other educational needs, $69.3 million is going toward reconstructing roads and other transport projects, $27.5 million for health and $14.9 million for power projects. The $400 million in new funding expected to be approved in June will be used mainly in the rural housing and education sectors.
Muzaffarabad, located at the confluence of the Jhelum & Neelum rivers and nestled between verdant hills, was chosen as the site of ADB's new Extended Mission because of its close proximity and access to all five earthquake affected districts of North West Frontier Province (NWFP) and the four districts of AJK. The Government of AJK provided the land and facilitated the construction of the building.
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