ISLAMABAD: Continued efforts by the government of Pakistan toward fiscal consolidation and policy reforms will be key to sustaining improvements in macroeconomic stability, especially in broadening the tax base and improving the business environment, says the Asian Development Bank (ADB).
The Bank in its latest report "Asian Development Bank and Pakistan; Fact Sheet", stated that the Covid-19 pandemic continues to pose a major health care and economic challenge to Pakistan and reforms are required to promote high value-added exports, expand social spending, reinforce energy sector financial and technical sustainability, and implement structural changes that will strengthen institutions and create jobs, says.
It further stated that ADB will support Pakistan's development priorities as outlined in the bank's new country partnership strategy, 2021-2025. The strategy focuses on improving economic management, building resilience, and boosting competitiveness and private sector development. ADB's assistance will comprise support for structural reforms and project assistance in key sectors, including energy, transport, irrigation, agriculture, urban infrastructure and services, small and medium-sized enterprises, and social development.
The bank will also mobilize private financing, expand its own financing and technical assistance for public-private partnerships, and explore guarantee products to help the government leverage more financing and support capital market development. Pakistan's growth prospects have been influenced by COVID-19 challenges. ADB's lending will include policy support for the energy sector and capital market as well as trade and competitiveness to return the economy to a sustainable growth trajectory.
Since 1966, ADB has committed $34.36 billion in sovereign loans, $150.5 million in grants, $1.01 billion in non sovereign financing, $203.7 million in technical assistance projects, and $591 million in ADB-administered co financing for Pakistan. Cumulative loan and grant disbursements to Pakistan amount to $26.96 billion. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds.
In 2020, ADB's loan and grant disbursements to Pakistan amounted to $1.78 billion, comprising $1.1 billion in program lending and $680.7 million from project lending. ADB provided significant and rapid support to Pakistan's coronavirus disease (COVID-19) pandemic response. This included a $500 million loan under the bank's COVID-19 Active Response and Expenditure Support Program to help the government deliver social protection programs. The funds were channelled through the government's flagship poverty alleviation program, Ehsaas, to expand health sector capabilities and deliver fiscal stimulus to boost economic growth and create jobs. ADB also approved $2 million from its Asia Pacific Disaster Response Fund and $3 million through regional technical assistance to help Pakistan purchase personal protective equipment and other emergency medical supplies. The bank and the Swiss Agency for Development Cooperation co financed $1 million to train 4,500 doctors and paramedical staff in COVID-19 critical care.
The report further stated that total commitments in loans and equity investments from ADB's own funds in 2020 amounted to $1.4 billion for 38 transactions in economic and social infrastructure, finance sector, and agribusiness. ADB also actively mobilizes co financing from commercial and concessional sources. In 2020, ADB mobilized $1.9 billion of long-term project co financing and $3.3 billion of co financing through its Trade and Supply Chain Finance Program and Microfinance Program. Total outstanding balances and commitments of no sovereign transactions funded by ADB's own resources stood at $14.3 billion as of 31 December 2020. Total outstanding balances and commitments of ADB's no sovereign transactions in the country as of 31 December 2020 was $497.1 million, representing 3% of ADB's total non sovereign portfolio.
Copyright Business Recorder, 2021