The Asian Development Bank (ADB) approved $1 billion emergency loan for Pakistan, on December 6, to boost the country’s public finance and “help strengthen a slowing economy”. Pakistan has been facing difficulties in accessing financial assistance after it was placed on the ‘Grey List’ by the Financial Action Task Force (FATF).
The decision to provide immediate budget support has been taken by the ADB to stabilise Pakistan’s economy after the country witnessed major deterioration in its fiscal position in mid-2018. ADB, in a statement, said that the financing was approved after Pakistan implemented a series of reforms to improve its current account deficit, strengthen its revenue base and protect the poor against the social impact of the economic crisis.
“ADB is committed to providing wide-ranging support to strengthen Pakistan’s economy and reduce the risk of external economic shocks,” said Werner Liepach, ADB Director General for Central and West Asia.
“These funds will meet the government’s emergency financing needs to prevent significant adverse social and economic impacts and lay the foundations for a return to balanced growth,” he added.
In the first of three subprograms, $300 million policy-based loans have been approved to help Pakistan address financial sustainability, governance, and energy infrastructure policy constraints in the country’s energy sector. According to ADB, Pakistan is yet to overcome the challenge of inefficiencies, distortions, and uneven reform progress in the sector. “These inefficiencies were estimated to have cost the country’s economy up to $18 billion, or 6.5% of gross domestic product, in 2015,” the bank said in a statement.
Last month, Pakistan Prime Minister Imran Khan showed concerns about the country’s dependence on China, UAE, and Saudi Arabia, lamenting the fact that it will never become self-dependent in such a scenario. “When I went to foreign nations to collect funds...I am very grateful to the UAE, China, Saudi Arabia and even Qatar...But this is not good for the dignity of a nation, asking for loans from others,” said Khan.
(with inputs from agencies)