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ISLAMABAD: The Covid-19 pandemic continues to pose a major health care and economic challenge to Pakistan, says the Asian Development Bank (ADB).

The bank in its latest report, “Asian Development Bank Member Fact Sheet”, stated that continued efforts 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.

Furthermore, 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.

The bank stated that it 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.

The 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 mobilise 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 the Covid-19 challenges. The 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.

In 2020, the 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.

The 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. The 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 cofinanced $1 million to train 4,500 doctors and paramedical staff in Covid-19 critical care. The ADB committed $300 million in emergency assistance and $5 million from Norway to strengthen Pakistan’s public health system and help meet the basic needs of the poor and vulnerable.

The bank also reallocated $30 million from the National Disaster Risk Management Project to support the country’s pandemic response, while the National Disaster Risk Management Fund allocated an additional $20 million from interest earned.

In other measures, the ADB provided a $300 million policy-based loan to strengthen Pakistan’s finance sector, develop competitive capital markets, and encourage private sector investment. The bank also committed a $300 million policy-based loan to help promote macroeconomic stability by improving trade competitiveness and diversifying exports.

The ADB raised 1.83 billion Pakistan rupees ($11.4 million) in local currency bonds. The rupees-linked offshore bond will enable the ADB to extend local currency loans to boost to private sector development in Pakistan.

Total commitments in loans and equity investments from the ADB’s own funds in 2020 amounted to $1.4 billion for 38 transactions in economic and social infrastructure, finance sector, and agribusiness.

The ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2020, the ADB mobilised $1.9 billion of long-term project cofinancing and $3.3 billion of cofinancing through its Trade and Supply Chain Finance Program and Microfinance Program. Total outstanding balances and commitments of no sovereign transactions funded by the ADB’s own resources stood at $14.3 billion as of 31 December 2020. Total outstanding balances and commitments of the ADB’s no sovereign transactions in the country as of 31 December 2020 was $497.1 million, representing three percent of the ADB’s total no sovereign portfolio.

In 2020, Pakistan received a total of $1.45 billion loan cofinancing from the Agence Française de Développement, the Asian Infrastructure Investment Bank, the Green Climate Fund, the OPEC Fund for International Development and the World Bank for three investment projects; and $17.08 million grant cofinancing from the Government of Norway and the Green Climate Fund for two investment projects.

Copyright Business Recorder, 2022

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