May 29, 2020 (MLN): Pakistan joined the Asian Development Bank (ADB) as a founding member in 1966 and since then, ADB has been working with the country to strengthen its key infrastructure, improve social services, and promote inclusive economic growth.
The bank’s country operations business plan, 2020–2022 for Pakistan outlines $7.1 billion in assistance. This includes project loans; policy-based lending for structural reforms; multi-tranche financing facilities for energy, transport, water, and other urban infrastructure and services; and results-based lending for energy and social services.
ADB aims to mobilize private financing for development projects, expand its financing and technical assistance for the public-private partnerships, and explore policy-based guarantees to help the Government of Pakistan leverage more financing and develop capital markets.
In agriculture, ADB initiated work during 2019 on a $275 million irrigation project in Jalalpur and committed a grant of $5.1 million that will enhance technology-based agriculture in Punjab and prepare an integrated water resources project at the Kurram Tangi Dam.
In the energy sector, ADB maintained a strong presence with an ongoing portfolio of $2.2 billion covering energy generation, transmission, distribution, energy efficiency, and renewable energy development. In 2019, ADB committed a $300 million policy-based loan that will help the government address financial sustainability, governance, and energy infrastructure policy constraints
In 2019, Pakistan received $80 million in loan co-financing from the Export-Import Bank of Korea for the Energy Sector Reforms and Financial Sustainability Program — Subprogram 1, and $8.5 million in grant co-financing from the Government of Switzerland, the High-Level Technology Fund, the Japan Fund for Poverty Reduction, and the Urban Climate Change Resilience Trust Fund for three projects.
Pakistan has been experiencing fiscal and current account deficits. Continued efforts toward fiscal consolidation will be key to sustaining improvements in macroeconomic stability. Areas for specific attention include broadening the country’s tax base, committing to policy reforms, and improving the country’s business environment. Reforms are also required to promote high value-added exports, expand social spending, progress energy sector development, and strengthen institutions. To help improve Pakistan’s fiscal sustainability and create a better business environment, ADB will continue to engage in policy dialogue with the government on managing macroeconomic imbalances, while maintaining the momentum of structural reforms to support economic stability and expansion.
ADB will continue to support Pakistan through investments outlined in the country operations business plan, 2020–2022. This includes making greater use of project readiness financing as well as embracing smart technology and innovative development approaches.
Pakistan’s growth prospects will continue to be influenced by reforms initiated by the International Monetary Fund’s stabilization program along with projects under the Central Asia Regional Economic Cooperation Program, the China– Pakistan Economic Corridor, and other development initiatives. Program lending will include policy support for economic growth, reforms to improve the energy sector, and enhanced trade opportunities and international competitiveness.
The contents of this article have been taken from the ‘Member Fact Sheet’ released by the Asian Development Bank. The full report can be accessed by clicking on this link.