Pakistan receives $500mn from AIIB: finance ministry

Pakistan has received $500 million from the Asian Infrastructure Investment Bank (AIIB), the Ministry of Finance stated on Tuesday.

“Government of Pakistan has today received $500 million from AIIB. The funds are deposited with the State Bank of Pakistan (SBP) and will augment our reserves,” the ministry said in a post on its Twitter handle.

Earlier, Finance Minister Ishaq Dar had said that Pakistan would receive $500 million as co-financing for the BRACE development program from the AIIB. The BRACE (Building Resilience with Active Counteryclical Expenditures Program) is an Asian Development Bank financing programme to counter the social fallouts of economic crisis.

Economic crisis: AIIB to give us $500m to counter social fallout

The development is crucial for the cash-strapped country, which has seen its foreign exchange reserves dwindle in recent months. The country’s reserves stood at $7.8 billion as of November 18, barely enough to cover imports for a month.

At the same time, falling reserves have increased worries over Pakistan's ability to meet debt obligations, and increased perceived default risks.

There has been growing uncertainty about the ability of Pakistan to meet external financing obligations with the country in the midst of an economic crisis and recovering from devastating floods that killed over 1,700 people.

However, in an analyst briefing after the monetary policy announcement on Friday, SBP Governor Jameel Ahmad said the country will repay its debt payments in a timely fashion and necessary inflows will be arranged from multilateral institutions along with certain rollovers.

The governor noted that $500 million from AIIB was expected to land in central bank reserves on Tuesday.

He also said Pakistan will repay a $1 billion international bond on December 2, three days before its due date. The bond repayment, which matures on December 5, totals $1.08 billion, Ahmad told the briefing, according to two analysts who were present.