The Asian Development Bank (ADB) has approved a $500 million policy-based loan to support the government of Pakistan's reforms to improve trade competitiveness and exports as a defence against external shocks and to help finance the country's trade deficit. The ADB also approved a $750,000 technical assistance package to support the preparation and implementation of the programme.
Federal Minister for Economic Affairs Muhammad Hammad Azhar witnessed the loan signing ceremony for Trade & Competitiveness Programme (Sub-programme-1). The loan agreement was signed by the Secretary Economic Affairs Division Noor Ahmed and ADB Country Director Xiaohong Yang. The Trade and Competitiveness Programme will introduce important tariff and tax-related policy reforms to support Pakistan's export industries and increase their competitiveness internationally and also to strengthen key trade facilitating institutions such as accreditation bodies, the EXIM Bank of Pakistan, and the National Single Window.
The minister for economic affairs said Pakistan's exports are concentrated in less sophisticated and lower value-added products and lack diversification and innovation. He expressed that the ADB's policy-based lending will not only strengthen the foreign exchange reserves but will also provide fiscal space to the government and boost economic activities in the country.
Azhar tweeted, "The ADB Board today approved release of USD 500 million to support the present government's reform agenda for improving Trade Competitiveness to enhance exports. Proceeds of this facility will boost FX reserve built up & give much needed budgetary support to government of Pakistan. More significantly, budgetary support programme from a long term development partner i.e. ADB has been restored after a gap of more than two years. I am thankful to the ADB and its President for their support and reposing confidence in the present Govt's reform agenda."
The minister reiterated that the government is fully committed to improve governance, bring economic reforms and achieving sustainable development. The government aims to put Pakistan's economy on the path of balanced growth and increase per capita income. He emphasised that the ADB should further scale up its assistance to Pakistan, both for programme lending and project financing.
"The ADB has a 53-year history of strong partnership with Pakistan and we are pleased to be in a position to provide this important support for the country's economic reform programme," said ADB Vice President Shixin Chen.
"The Trade and Competitiveness Programme focuses on addressing structural issues obstructing Pakistan's export competitiveness through reforms in the areas of tax and tariff rationalisation, as well as institutional strengthening. Moving forward, the ADB is committed to providing wide-ranging support to strengthen Pakistan's economy and reduce the risk of external economic shocks."
Supported by the International Monetary Fund (IMF), ADB and other development partners, the government has now committed to a range of structural reforms to the country's trade environment to improve its export performance, reduce the current account deficit, and drive economic growth.
"Trade is an important pillar in Pakistan's overarching development objective to foster economic stability and sustainable high growth," said ADB Director General for Central and West Asia Werner Liepach. "The Trade and Competitiveness Programme will help define and implement key reforms to help tackle these development challenges and bring livelihood opportunities to the people of Pakistan."
Trade & Competitiveness Programme will help Pakistan to promote macroeconomic stability, improve export performance, and boost economic growth by facilitating improved trade competitiveness. Under this programme, the government has introduced important tariff and tax related policy reforms to support Pakistan's export sector and improve its competitiveness internationally and strengthen key institutions involved in facilitating trade, including accreditation bodies like Export-Import Bank of Pakistan (EXIMBP) and National Single Window (NSW).
Country Director Xiaohong Yang stated that ADB is one of the leading development partners of Pakistan. The ADB fully supports the government's development vision and policies. She expressed that ADB is providing its support for policy reforms and project financing in the key priority areas such as energy, road, social sector, water & irrigation and urban services. She also reiterated the ADB's strong commitment to further strengthening and expanding its partnership with Pakistan.