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US promises $200m to finance initial work on Diamer-Bhasha dam

The United States has promised to finance Pakistan’s multibillion Diamer-Bhasha dam project, said Finance Minister Abdul Hafeez Sheikh at the conclusion of a series of meetings with American officials on advancing bilateral economic cooperation.

Sheikh said that the US would provide $200 million for the completion of preliminary work on the multi-year power generation and water conservation project, which is likely to cost more than $10 billion.

He dismissed the impression that the Asian Development Bank (ADB) had backed out of its commitment to finance the mega project. “The ADB and the US would finance the feasibility study, surveys and consortium formation for the dam, to be built in Gilgit-Baltistan in an estimated eight to 10 years,” he said. He added that Pakistan would complete the land survey, feasibility and land acquisition processes to pave way for the dam’s construction. “This is a very good development,” he said of the US’ commitment to the project, as he sat next to Pakistan’s Ambassador to the US, Sherry Rehman.

Washington’s financing of the project would be in addition to the ongoing support it has been providing to revamp the existing dams’ power generation capacity. The finance minister also revealed that Pakistan and the United States would launch the Pakistan Private Investment Initiative with an amount of $80 million within a couple of months.

“This would help spur economic activity, generate jobs and contribute to improvement in bilateral ties,” he said.

Islamabad and Washington have also agreed to set up a joint task force to identify products and ways Pakistan may bolster its exports to the United States market.

In another sign of expanding cooperation between the two countries, USAID administrator would be visiting Pakistan to review the progress on the ongoing energy and infrastructure development projects.

“We were able to make a lot of headway,” said Sheikh. He praised Sherry Rehman’s tremendous diplomatic outreach towards creating goodwill for Pakistan in Washington, saying that the ambassador’s efforts greatly helped in making Pakistan-US talks on economic cooperation successful.

The finance minister voiced his firm confidence in Pakistan’s economic growth trajectory and said that the economy was poised to grow by more than four percent of GDP during the current financial year.

Recounting a series of positive macro-economic indicators, he said that the government’s reforms have resulted in boosting growth from under two percent of GDP to 3.7 per cent last year, raising the export volume to $25.5 billion in the last fiscal year, recording a 21 percent increase in tax revenue collection, curbing inflation from a high of 25 percent a few years ago to a single digit, improving agrarian output and seeing a significant increase in the inflow of foreign remittances.

At the same time, the finance minister recognised the challenges the country had to deal with in bolstering investment in the face of the security situation along the Afghan border and international perceptions.

“Pakistan offers a liberal investment regime with no bar on profit transfers and equity,” he said.

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