Financing under CAF: Govt urges ADB to scale up support

SAMARKAND (Uzbakistan): Pakistan on Monday warned that tighter country exposure limits under the Capital Adequacy Framework could choke critical financing to high-need economies, urging the Asian Development Bank (ADB) to recalibrate its policies, scale up support in line with crisis realities, expand private sector operations and ensure uninterrupted disbursements to keep development commitments on track.

Noor Ahmed, Executive Director at ADB and Temporary Alternate Governor, representing Pakistan at the 59th annual meeting of ADB, delivered the statement in the absence of Governor Ahad Khan Cheema (Minister for Economic Affairs) and Alternate Governor Muhammad Humair Karim (Secretary, Ministry of Economic Affairs). Both officials reportedly skipped the meeting under the Prime Minister’s austerity measures.

Ahmed said that the 2023 Capital Adequacy Framework (CAF) review created additional lending headroom of USD 100 billion over the next 10 years. Concurrently, the bank also introduced country exposure limits.

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However, this made the bank more risk-averse and conservative in its lending approach towards low-income and high concentration countries, as the country exposure limits were primarily based on the country’s sovereign risk ratings with less regard to the size of the economy, population, and level of poverty.

Many of the major DMCs are now likely reaching their country’s exposure limits and are placed in the high concentration category. This would likely have serious implications for ADB’s future portfolio growth in those countries, he added.

He further said that while Pakistani authorities appreciate the bank’s proactive risk management practices and innovative solutions, they strongly recommend that the Management introduce appropriate policy changes, particularly expanding private sector operations in developing member countries and increasing country exposure limits appropriately in the ongoing review process, so that the members can maintain their full access to ADB resources and safely navigate through the prevailing tough times.

The theme of this year’s meeting, “Crossroads of Progress: Advancing the Region’s Connected Future,” reflects a shared ambition for the region navigating complex challenges, said Ahmed, adding that it underscores the imperative of strengthening connectivity, enhancing economic resilience, and fostering integration among ADB members as our destiny is connected in an increasingly uncertain global environment.

“We are meeting at a critical juncture. As our economies were beginning to resume the growth momentum, severe risks and uncertainties emerged, unleashed by the conflict in the Middle East. It has generated significant spillovers for the developing members of Asia, through disruptions in energy supplies and trade, price pressures, rising transportation costs, and increasing pressures on food security. These factors are amplifying inflationary pressures with serious implications for fiscal and external balances, particularly in economies with high import dependence and limited fiscal buffers”, said Temporary Alternate Governor.

He further said that given the largely exogenous nature of these shocks, timely, well-targeted, and adequately scaled-up support from development partners, including ADB, will be essential to help mitigate the economic impact.

He further said that Pakistan remains committed to playing a constructive role in attaining peace between the United States and Iran and is fully deploying diplomatic capital to facilitate dialogue and de-escalate tensions. These efforts reflect Pakistan’s broader commitment to promoting regional stability and cooperation, which remains key to this region’s prosperity, he added.

Ahmed further said that Pakistan is currently undergoing a stabilization and reform program. Pakistan has implemented a wide range of stringent fiscal, structural, and governance reforms to achieve macroeconomic stabilization and growth. These efforts have focused on broadening the tax base, enhancing energy sector efficiency, rationalizing expenditures and eliminating untargeted subsidies, strengthening governance of state-owned enterprises, and promoting trade and investment, he added.

As part of these reforms, the government has also advanced its privatization agenda, including the recent privatization of Pakistan International Airlines (PIA). The reform program continues to be closely coordinated with key development partners, including the IMF, World Bank, and ADB. Besides, Pakistan’s progress has been externally validated through successive upgrades in its sovereign credit rating.

Copyright Business Recorder, 2026