The Asian Development Bank (ADB) will disburse $200 million to Pakistan before the end of the current fiscal year ending June 30, Pakistan's finance ministry said on Wednesday. The funds are meant for capital reforms but could help narrow the fiscal deficit, which the State Bank has projected at 6.2 percent for the 2010-11 financial year as against government's target of 5.5 percent.
The bank agreed to release "$200 million for second generation capital reforms" during a meeting with Pakistani officials in Islamabad, the ministry said in a statement. Pakistan central bank on Saturday that the fiscal deficit needed to be contained. The IMF has delayed the sixth trance of its $11 billion loan programme, agreed in November 2008, since August last year for Pakistan due to the country's slow implementation of fiscal reforms. The central bank also urged the government to increase its tax to GDP ratio, which is around 10 percent, one of the lowest in the world, which would help to manage the fiscal deficit.