The new loan, approved by ADB's Board of Directors on Wednesday, is part of a $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 $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 $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 PRs175,000 (about $2,900) over four installments. For a partially damaged house, the owner will receive PRs75,000 (about $1,230) and for houses with minor damage, PRs25,000 (about $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 PRs75,000 (about $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 $405 million. This was followed by a $5 million grant, $12.5 million increase in financing and $62.5 million reallocation of loan savings from other projects. In addition, ADB has helped mobilize about $97 million in additional grant funding.
The new $400 million loan carries an interest rate of 1 percent per year and a maturity of 40 years, including a grace period of 10 years.
- Asian Development Bank
- © Asian Development Bank