Aid to Pakistan by the Numbers
What the United States spends in Pakistan
The United States is the largest source of bilateral aid to Pakistan. For FY2010, the United States has budgeted approximately $1.2 billion in economic assistance to Pakistan, with another $300 million pending through the president’s supplemental request. In the next few years, the United States expects to spend more than $1.5 billion a year, as authorized by the Enhanced Partnership with Pakistan Act of 2009. Through this bill, better known as the Kerry-Lugar-Berman bill, Congress authorized (but has not yet appropriated) a tripling of U.S. development assistance to Pakistan to $7.5 billion over five years to improve Pakistan’s governance, support its economic growth, and invest in its people.
Compared to funding for other development initiatives, the U.S. aid pledged to Pakistan is significant. The administration’s $1.5 billion funding request for economic assistance to Pakistan for FY2011 exceeds the $1.39 billion requested for combating climate change, the $1.3 billion for the Millennium Challenge Corporation, and the $861 million for disaster relief worldwide, and it is about half of the entire global health budget of USAID. 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 large amount of U.S assistance pledged to Pakistan in the next few years follows a period 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. Peaks in aid have followed years of neglect. This pattern has rendered the United States a far cry from a reliable and unwavering partner to Pakistan in the past. In several instances, including as recently as the 1990s, U.S. aid was even halted entirely and the doors of the USAID offices shuttered. Thus the current “quantum leap” in development assistance, as described by Ambassador Holbrooke, represents a record high in what has been a turbulent history of U.S. assistance to Pakistan.
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 Pakistan
While 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.
Nearly all of Pakistan’s major multilateral partners have committed to increase their funding to Pakistan over the next few years. The World Bank tripled its committed support for Pakistan in FY2009, reaching an all-time high of $1.7 billion. The ADB, which disbursed a record $1.9 billion in 2008, plans to loan an average of $1.5 billion annually through 2011. The UK’s Department for International Development has pledged to double assistance to Pakistan to approximately $250 million per year. Thus, the increases in U.S. aid are part of a larger phenomenon of increased international support for Pakistan’s development.
The 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. 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 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 is currently under preparation.
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. The pledges have been slow to materialize.
For more information and detailed data on donor flows to Pakistan, see the State Bank of Pakistan’s Annual reports and its economic data.