Manila, Feb 3, 2007 (ABN Newswire) - The Government of Belgium has agreed to cancel about Euro10 million based on net present value (about US$13 million) in debt owed by Pakistan, which will in turn transfer the equivalent funds into ADB's Pakistan Earthquake Fund (PEF).

"We are very pleased to conclude this innovative cofinancing approach with Belgium to finance additional reconstruction works particularly in the health and education sector," says Werner Liepach, Principal Director of ADB's Office of Cofinancing Operations.

The earthquake that struck the northern areas of Pakistan in October 2005 was the most devastating in its history. Official figures estimate that at least 80,000 people were killed and more than 200,000 were injured in the North West Frontier Province and Azad Jammu and Kashmir (AJK).

Some 2.6 million were left without shelter and an estimated 1.6 million without adequate food security or means of livelihoods. There was extensive damage to economic assets, and infrastructure, with hospitals, schools and transport systems debilitated or destroyed.

A preliminary damage and needs assessment report prepared by ADB and the World Bank only 19 days after the quake estimated that about $5.2 billion was needed to effectively carry out a relief, recovery, and reconstruction strategy.

During the donor conference of 19 November 2005, ADB pledged $1 billion for Pakistan's reconstruction efforts from the quake. Before the conference, ADB had reallocated $80 million from various ongoing projects and also established PEF, which included an initial contribution from ADB of $80 million in grants.

Similar to ADB's Asian Tsunami Fund, PEF aims to pool and promptly deliver grant financing for projects that support immediate reconstruction, urgent rehabilitation, and other associated development activities.

Belgium's debt-for-development swap, totaling Euro9.92 million based on net present value in debt owed by Pakistan, follows a similar move in December by Norway, which cancelled $20 million equivalent in debt to be remitted to the PEF. Agreements have also been signed with Finland to contribute $12 million and Australia $15 million to the PEF.