The Asian Development Bank (ADB) on Wednesday released $1.5 billion for Pakistan to support the economy and rehabilitate the affected people in the wake of recent floods. The development was shared by Federal Minister for Finance and Revenue Ishaq Dar on his Twitter handle.
“ADB has released funds $1.5 billion to Pakistan under BRACE program for the credit of Government of Pakistan’s account with State Bank of Pakistan (SBP),” said Dar.
The funding will boost Pakistan’s foreign exchange reserves position, which has worsened in recent months, leaving the country with just a few weeks of import cover and putting the currency under pressure.
As of October 14, 2022, foreign exchange reserves held by the SBP clocked in at $7.6 billion, according to data released last week. Net foreign reserves held by commercial banks amounted to $5.65 billion, taking the country’s total reserves’ position to $13.25 billion.
Last week, ADB had approved $1.5 billion in financing to help the Pakistan government provide social protection, promote food security, and support employment for its people amid devastating floods and global supply chain disruptions.
The loan, provided under ADB’s Building Resilience with Active Countercyclical Expenditures (BRACE), will be utilised to fund the government’s $2.3 billion countercyclical development expenditure programme designed to cushion the impacts of external shocks, including the Russian invasion of Ukraine, said the Manila-based lender in a statement on Friday.
The $1.5-billion countercyclical support is part of ADB’s response package to support people, livelihoods, and infrastructure in Pakistan in the wake of the recent floods which have affected over 33 million people and caused extensive damage to infrastructure and agriculture, it said.
“Pakistan’s recovery from the COVID-19 pandemic has been impeded by external shocks,” said ADB Director General for Central and West Asia Yevgeniy Zhukov back then.
On Monday, during an agreement signing ceremony with the Government of Pakistan, the ADB officials said that the programme will provide timely liquidity to Pakistan and help mitigate the immediate impact of exogenous shocks.
“This will increase social protection, enhance food security, and aid in employment of flood-affected people,” they said. “It will also provide critical support to Pakistan at a difficult time.”
The team added that the “ADB stands ready to assist the government and this cooperation is a result of combined efforts.”
On the occasion, PM Shehbaz thanked the ADB for supporting Pakistan in the ongoing challenging times.
The development comes after record monsoon rains in south and southwest Pakistan and glacial melt in northern areas triggered flooding that has impacted nearly 33 million people in the South Asian nation of 220 million, killing over 1,700 persons, while sweeping away homes, crops, bridges, roads and livestock in damages estimated at $40 billion.