Pakistan’s growth prospects bank on IMF-backed reforms: ADB

The Asian Development Bank (ADB) on Friday said Pakistan’s growth prospects with ongoing International Monetary Fund (IMF)-backed reforms are aimed at fiscal consolidation and development initiatives to uphold economic stability, reported The News.

In its latest country factsheet, ADB said reforms initiated by IMF’s stabilisation program along with projects under the Central Asia Regional Economic Cooperation Program, the China-Pakistan Economic Corridor, and other development initiatives “will continue to influence Pakistan’s growth prospects”.

“Pakistan has been experiencing fiscal and current account deficits,” ADB said. “Continued efforts toward fiscal consolidation will be key to sustaining improvements in macroeconomic stability.”

Last year, the IMF had agreed to extend $6 billion to Islamabad to help Pakistan return to growth after setbacks due to drying up of inflows.

The bank further underscored the need for Pakistan to broaden its tax base, improve the business environment and introduce reforms 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,” it said, adding, they will continue to support Pakistan through investments outlined in the country operations business plan, 2020-2022.

Last year, ADB had approved $7.1 billion under country operations business plan, 2020-2022 for Pakistan. The plan 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 said its operations in the country focused on developing energy-efficient and climate-resilient transit systems and infrastructure, improving secondary education, enhancing technology-based agriculture, and advancing the energy sector. 

According to details provided, there is an ongoing portfolio of $2.2 billion covering energy generation, transmission, distribution, energy efficiency, and renewable energy development. The bank has disbursed $25.18 billion in cumulative loan and grant disbursements to Pakistan since 1966.

The bank is also supporting public-private partnership initiatives in the country to support the delivery of public infrastructure. It has also provided financial assistance to non-sovereign projects and financial intermediaries as a catalyst for private investments.

In 2019, total commitments from ADB’s own funds (in equity and direct loans) amounted to $3 billion for 38 transactions in economic and social infrastructure, the finance sector, and agribusiness.

Last year, the ADB mobilised $3.28 billion of long-term co-financing and $3.69 billion of co-financing in trade finance, microfinance, and supply chain finance programs. Total outstanding balances and commitments of non-sovereign transactions funded by ADB’s own resources stood at $13.78 billion as of 31 December 2019.

Originally published in The News