ADB Provides Pakistan with $500 Million to Accelerate Economic Transformation
MANILA, PHILIPPINES – The Asian Development Bank (ADB) has approved a $500 million loan to support Pakistan’s efforts to address harm done to poor families and the country’s economy by unprecedented international food and fuel price hikes.
The ADB loan will support ongoing changes in the energy and agriculture sectors, and will help lay the foundation for a radical transformation of the economy by diversifying, deepening and expanding a competitive industrial sector, and creating much-needed jobs for Pakistan’s young and growing labor force.
ADB support comprises a key part of a global financing plan underpinning the government’s economic stabilization program. The stabilization plan includes actions to shore up and manage foreign reserves, improve monetary policy, trim the fiscal deficit and its financing gap, and cut back on government borrowing from the State Bank of Pakistan. The stabilization plan is focused on protecting the poor through special safety net programs, and reassuring financial markets through fiscal and monetary discipline.
“Addressing the impact of fuel and food price increases unleashes immediate benefits to Pakistan’s people and to markets,” said Juan Miranda, Director General of ADB’s Central and West Asia Department. “The fiscal space created by reforms will cut financing gaps, generate conditions for a better deal in the sectors down the road, and provide much-needed cash flow to pay for safety net programs that protect the most vulnerable. ADB’s support balances the need for addressing the needs of Pakistan’s people while reassuring markets that the government is on the right track with its ongoing economic stabilization program.”
The stabilization plan was formulated by the Government, with technical advice from other parties. “ADB financing takes place within the context of this stabilization framework,” added Mr. Miranda. “We are one of several parties contributing to the financing of this plan; others will soon follow with their own financing and programs.”
Pakistan will strengthen the legal and regulatory framework of its financial sector through the ADB program. The State Bank of Pakistan, working closely with the government, has undertaken a series of actions to improve risk management in the sector, strengthen payment systems and protect consumers. This will create stability at a time when international markets are in turmoil. “The measures supported by ADB’s program will benefit ordinary Pakistanis, directly as well as indirectly,” said Mr. Miranda. “Timing is of the essence here.”
ADB is a major financing partner of Pakistan. Its strategy focuses on three areas: infrastructure (roads, irrigation and logistics), utilities (power, energy, urban services) and reforms (including social service provision and finance, public financial resource management, financial sector intermediation and capital markets development).-ADB Media Center
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