KARACHI: Pakistan on Wednesday received inflows amounted to $1 billion from international financial institutions as loan for essential budget support in wake of COVID-19.
The State Bank of Pakistan (SBP) has confirmed arrival of these inflows from two international institutions. According to State Bank, it has received one billion dollars from Asian Development Bank (ADB) and World Bank (WB). "Some $500 million each was received from ADB and WB," SBP said.
Last week, Pakistan signed an agreement with ADB for a $500 million loan. The World Bank and Asian Infrastructure Investment Bank (AIIB) each also signed loan agreements with the government of Pakistan for the same amount, totaling $1.5 billion financial support for Pakistan. Out of this committed amount, some one billion dollar has been received on Wednesday.
COVID-19 has severely hit Pakistan's economy and the country has estimated negative 0.4 percent GDP growth during FY20. In addition, the pandemic is expected to lead to a sharp decline in revenue collection and significant job losses in Pakistan.
Currently, Pakistan is facing some financial issues due to unexpected expanding to enhance the health sector capacity and strengthen its social safety to negate the effects of COVID-19.
ADB believed that its COVID-19 Active Response and Expenditure Support (CARES) program will help Pakistan to deliver social protection programs to the poor and vulnerable, expand health sector capabilities, and deliver a pro-poor fiscal stimulus to boost growth and create jobs as the country fights COVID-19.
Economist said that the arrival of $1 billion will help to increase the country's foreign exchange reserves. The total liquid foreign reserves held by the country stood at $16.76 billion as on June 12, 2020. With arrival of these inflows Pakistan's total liquid foreign exchange reserves are likely to reach approximately $17.5 billion mark.
ADB's loan was first approved on June 10 and is financed under the bank's CARES program. The CARES program is facilitated by parallel financing of $500 million from AIIB and another $500 million from the World Bank to support Pakistan.
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