ISLAMABAD: Continued efforts toward fiscal consolidation and policy reforms will be key to improvements in macroeconomic recovery and stability, especially in broadening the tax base and improving the business environment in the country, says the Asian Development Bank (ADB).
The bank in its report, “Asian Development Bank and Pakistan: Fact Sheet” stated that the devastating floods in 2022, the impact of the Covid-19 pandemic, security issues, structural risks, and adverse external shocks continue to pose major economic challenges to Pakistan.
“Reforms are required to promote high value-added exports, expand social spending, reinforce the energy sector’s financial and technical sustainability, and implement structural changes that will strengthen institutions and create jobs,” the bank added.
It further stated that uncertainties and institutional factors continue to weigh on project implementation.
These include land acquisition procedures, procurement delays caused by restrictions, and price fluctuations affecting the importation of construction materials. However, tripartite portfolio review meetings among ADB, the government, and executing agencies help resolve project implementation issues.
To date, the ADB has committed 740 public sector loans, grants, and technical assistance totaling $39.7 billion to Pakistan. Cumulative loan and grant disbursements to Pakistan amount to $30.76 billion. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds.
ADB’s ongoing sovereign portfolio in Pakistan includes 53 loans and three grants worth $9.59 billion.
In 2022, ADB’s loan and grant disbursements to Pakistan amounted to $2.49 billion.
This includes $1.8 billion in programme lending, $680 million from project lending, and $4.6 million from grants. ADB provided $1.5 billion to help Pakistan boost social protection, promote food security, and support employment for people.
To help the country improve governance and regulatory capacity, the ADB approved a $300-million loan for structural reforms within the Securities and Exchange Commission of Pakistan (SECP).
The loan will help strengthen the Government of Pakistan’s debt market and enhance market surveillance systems for better information exchange. It also aims to help increase access to financing for growth companies and state-owned enterprises.
The ADB committed a $100 million loan to help the Khyber-Pakhtunkhwa province in Pakistan improve the delivery of its healthcare services by modernising infrastructure and equipment; ensuring implementation of clinical protocols, standards, and guidelines; and improving human resources planning and medicine supply chain management.
Another $100 million loan for the Improving Workforce Readiness in Punjab Project will help strengthen the technical and vocational education and training sector while ensuring that skills training needs meet the demand for jobs in the country’s priority economic sectors.
The ADB acted swiftly to provide support following the mid-2022 flood in Pakistan that affected 33 million people, immediately disbursing a $3 million grant under the Asia Pacific Disaster Response Fund for the purchase of emergency supplies.
This was followed by a $554 million financing package to support flood recovery and reconstruction efforts and to strengthen the country’s disaster and climate resilience.
The financing, which includes a $475 million loan, a $3 million technical assistance grant, and a $5 million grant from the Government of Japan, will support the restoration of irrigation, drainage, flood risk management, on-farm water management, and transport infrastructure in the flood-affected provinces of Balochistan, Khyber-Pakhtunkhwa, and Sindh.
Total outstanding balances and undisbursed commitments of the ADB’s non-sovereign transactions in Pakistan as of 31 December 2022 was $242.48 million representing 1.9 percent of the ADB’s total private sector portfolio.
Copyright Business Recorder, 2023
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