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ISLAMABAD: The Government of Pakistan and the Asian Development Bank (ADB) on Wednesday signed loan agreement of third capital market development programme (subprogram -1) amounting to $300 million.

The ADB official told Business Recorder that out of $300 million, $290.204 million was concessional at the rate of two percent, and $9.796 million was Ordinary Capital Resources (OCR).

According to the Economic Affairs Division (EAD), the ADB is likely to disburse $300 million in next few days as balance of payment support to the Government of Pakistan.

This will augment foreign exchange reserve position of the country, it added.

The bank approved the $300 million policy-based loan on September 28, 2020, to help strengthen Pakistan’s finance sector by supporting measures to develop competitive capital markets, and encourage private sector investment in the country.

Makhdum Khusro Bakhtyar, Minister for Economic Affairs, witnessed the loan signing here on Wednesday.

The loan agreement was signed by Noor Ahmed, secretary, the Economic Affairs Division, and the country director ADB.

Third Capital Market Development Programme will facilitate the design and implementation of reforms that are necessary to create an enabling environment for the emergence of competitive capital markets, and to achieve greater capacities in size of financial markets.

The reforms are guided by three key objectives i.e. stability, diversification, and facilitation.

The reforms proposed under this programme will lower the cost of financial intermediation, and facilitate private sector investment to generate sustainable growth and job opportunities.

It will also mitigate the negative impact of capital market instability on the economy and help to diversify Pakistan’s financial system.

It will also diversify the investor base, develop important market infrastructure such as surveillance systems, and improve the supply of alternative financial instruments.

Additionally, the programme will help the government to strengthen its debt management proficiency.

The country director stated that the ADB was one of the leading development partners of Pakistan.

The ADB fully supports the government’s development vision and policies.

The ADB is providing its support for policy reforms and project financing in the key priority areas such as energy, road, social sector, water and irrigation, and urban services.

The ADB also assured strong commitment to further strengthening and expanding its partnership with Pakistan.

The Federal Minster for Economic Affairs deeply appreciated the ADB for this support.

He highlighted that diversification, deepening and expansion of Pakistan’s capital market was critically important for domestic resource mobilisation for development of business and industry, economic development, and job creation.

The minister further highlighted the commitment of his government towards transformation of financial sector in terms of diversity, access, inclusiveness, and reaching out to underserved areas and segments.—

Copyright Business Recorder, 2020