Pakistan Aid Facts

August 26, 2010
This is a joint post with Molly Kinder.As Pakistan struggles to cope with the worst flooding in the country’s history, international donors have contributed upwards of $800 million to humanitarian relief efforts.  (See here for the UK’s Guardian newspaper’s ongoing tracking of individual donor pledges to Pakistan’s floods.)  The full cost of rebuilding Pakistan’s flooded regions is still being calculated, and will no doubt be staggering.  The Asian Development Bank has already pledged $2 billion to the recovery and reconstruction efforts and the World Bank another $900 million.   Most other international donors have yet to announce their contributions to the mammoth rebuilding effort that is to come.As background, this post lays out how much the United States and other international bilateral and multilateral donors were already giving to Pakistan, before the floods.  These aid figures were compiled earlier this year, and do not take into consideration any reprogramming or redirection of funds towards flood relief and recovery.  As donors adjust their assistance plans, we will continue to track the numbers, and will update our “Aid to Pakistan by the Numbers” page. Check back for more! You’ll find raw data for all of the charts in this post here.What the United States currently spends in PakistanPakist assistance by accountThe United States is the largest source of bilateral aid to Pakistan. Including supplemental appropriations, the United States has budgeted approximately $1.5 billion in economic assistance to Pakistan for fiscal year 2010. Requested FY2011 budgetsThis figure is in line with the levels authorized by the Enhanced Partnership with Pakistan Act of 2009, better known as the Kerry-Lugar-Berman bill, which tripled U.S. economic assistance to Pakistan to $7.5 billion over five years (note that each year of KLB funding will have to be appropriated through the normal budget process).Compared to other U.S.-funded development initiatives and to aid programs in other developing countries, the U.S. aid commitment to Pakistan is quite large. As a point of comparison, the United States has pledged nearly ten times more nonmilitary aid to Pakistan than to Bangladesh, a neighboring country with a comparable population size and similar development needs.The sectoral breakdown of the FY2011 budget spend plan reflects the Obama Administration’s stated priorities in Pakistan. The strategy  calls for US investments in “high impact, high visibility” projects – such as large-scale infrastructure projects such as in hydroelectric dams and irrigation projects-  that are readily visible to the public, have a quick impact, and address the immediate needs of the Pakistani population.  Infrastructure spending was projected to grow by $395 million (a more than sevenfold increase) from 2010 to 2011, while health and education budgets were set to decrease.U.S. aid to Pakistan by sectorThe surge in U.S assistance to Pakistan continues a pattern of extreme volatility in U.S. aid levels to Pakistan, which have waxed and waned for decades as U.S. geopolitical interests in the region have shifted.History of assistance to PakistanNOTE: For the years 2002–2007, we have added data on Coalition Support Funds spending, which constituted the bulk of military assistance to Pakistan during the post-9/11 period, to U.S. Greenbook data. In the absence of Greenbook data for the period from 2008 to 2010, we have used budget data and Congressional Research Service estimates. To make that distinction clear, those data are graphed using dotted lines.What other donors spend in PakistanWhile American development assistance once constituted the lion’s share of aid to Pakistan, the major multilateral development banks now provide more than half of all donor aid to Pakistan. Of the $4 billion in development assistance recorded by the State Bank of Pakistan in 2009, $2.6 billion came from multilateral organizations and development banks. Several non-OECD countries, most significantly China and Saudi Arabia, now give significant amounts of aid.  Some bilateral donors and nearly all of Pakistan’s major multilateral partners have drastically increased their funding to Pakistan in recent years.Average Grants and Loans to PakistanThe Asian Development Bank is Pakistan’s biggest multilateral partner, extending credit through its concessional wing, the Asian Development Foundation, and through the main Bank window. In 2008, the ADB disbursed a record $1.9 billion and made $1 billion in newly approved assistance, and has plans to loan an average of $1.5 billion annually through 2011.  Historically, the ADB has placed an emphasis on support for infrastructure projects (energy, transport, water, and sanitation). Lending is projected to continue at a high level, with an average of $1.5 billion in loans planned annually through 2011. For more information see the ADB’s 2009–2013 Pakistan Country Strategy.The World Bank tripled its committed support for Pakistan in FY2009, reaching an all-time high of $1.7 billion. The Bank has approved 30 projects totaling $3.7 billion between FY2006 and FY2009. The Bank is heavily invested in the education sector (in Punjab, Sindh, and Balochistan) and infrastructure (transport, sanitation, water management, and energy). Since 1999, it has provided $653 million to the Pakistan Poverty Alleviation Fund, which funds over 80,000 community organizations. The Bank’s Country Assistance Strategy for FY2010–2013 was recently published and can be found here.The IMF has extended credit to Pakistan several times since 1988, totaling 2.9 billion SDR ($4.64 billion) prior to 2008. Following the 2008 economic crisis, the IMF extended a line of credit that now amounts to over $11.3 billion. Conditions attached to this loan include the elimination of electricity and oil subsidies, reform of domestic taxation, reduction of the federal deficit, and the expansion of the social safety net.Recent efforts to coordinate and encourage donor assistance to Pakistan have revolved around the Friends of Democratic Pakistan group. The group includes 22 donors, including the World Bank, the Asian Development Bank, and the Islamic Development Bank along with all major bilateral partners. In April 2009, the members of this group pledged a total of $5.7 billion in new grants and loans over two years, although those pledges have been slow to materialize. The next Friends of Democratic Pakistan meeting is expected to take place in October and will explicitly address recovery and reconstruction needs in the wake of this summer’s flooding.


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