ISLAMABAD: The government of Pakistan and the Asian Development Bank (ADB) on Friday signed policy-based loan agreement amounting to $300 million for trade competitiveness and exports promotion.
The bank earlier approved $300 million policy-based loan to help promote macroeconomic stability in Pakistan by facilitating improved trade competitiveness and export diversification.
Makhdum Khusro Bakhtyar, Minister for Economic Affairs witnessed the signing ceremony.
The loan agreement was signed by Noor Ahmed, secretary, Economic Affairs Division and Xiaohong Yang, country director, ADB.
The ADB approved the Trade and Competitiveness Programme here on Friday.
This programme will help improve the exports by enhancing trade competitiveness and diversification.
Under Trade and Competitiveness Programme, the government is introducing important tariff and tax policy reforms to help improve Pakistan's international competitiveness and further strengthen key institutions, including accreditation bodies, the Export-Import Bank of Pakistan, and National Single Window.
This programme will also help Pakistan to further improve its current account balance in a sustained manner and strengthen foreign exchange reserves.
Makhdum Khusro Bakhtyar, Minister for Economic Affairs stated that the government's key economic reforms and policies helped stabilizing external account, despite the unprecedented challenges caused by the Covid-19 pandemic.
Pakistan's external account stability is underpinned by highest ever remittances, improved balance of trade and official inflows.
The minister further highlighted the commitment of his government towards achieving macroeconomic stability and growth through improved fiscal management and trade facilitation, better governance and strengthened regulatory framework.
Xiaohong Yang, country director stated that the ADB is a long standing development partner 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 financial management, energy, road, social sector, water and irrigation and urban services.
During the Board of Directors' meeting, the ADB management acknowledged that the government's ongoing efforts to ensure stability have started showing encouraging results despite the Covid-19 challenge.
"While Covid-19 hit Pakistan at a critical point in its macroeconomic recovery, the government's ongoing efforts to ensure stability have started showing encouraging results this fiscal year," said ADB Principal Public Management Specialist Hiranya Mukhopadhyay.
"ADB's program will support these efforts and help Pakistan to improve its export competitiveness - now more important than ever given the impacts of the pandemic."
The new financing falls under Subprogram 2 of the Trade and Competitiveness Programme.
Under the first phase, the ADB helped the government usher in key reforms, including reducing or abolishing tariffs and ad hoc duties on a large number of raw materials and intermediate goods.
Several steps were also taken to introduce e-commerce, strengthen key institutions involved in facilitating trade, and enhance the export certification process.
Since fiscal year 2004, Pakistan has registered a rise-and-fall pattern of export growth reflecting underperformance in its export industry and long-term decline in export competitiveness.
This is compounded by lost export growth momentum from Covid-19, which has reduced high-income countries' demand for manufacturing goods and disrupted the supply of raw materials.
The ADB is coordinating its efforts with other development partners and donors, while the program complements International Monetary Fund-led reform initiatives by helping to improve competitiveness, which will help build robust foreign exchange reserves.
Copyright Business Recorder, 2020