AfDB approves $ 1 billion emergency loan for Pakistan – business

The Asian Development Bank (AfDB) has approved an emergency loan of $ 1 billion to Pakistan to provide immediate support to the country’s finances and help strengthen a declining economy, according to a Press release published Friday.

The Quick Dispersion Loan is part of a multi-donor economic reform program led by the International Monetary Fund (IMF) to stabilize the economy that collapsed in mid-2018, the statement added.

The loan was approved after the government implemented a series of reforms and actions, backed by the IMF, to improve “the country’s current account deficit, strengthen its income base, and protect the poor from poverty. social impact of the economic crisis ”.

Commenting on the loan, AfDB Managing Director for Central and West Asia, Werner Liepach, said the bank is committed to providing support to Pakistan so that it can strengthen its economy.

“These funds will meet the government’s emergency financing needs to avoid significant negative social and economic impacts and lay the foundations for a return to balanced growth,” he said.

$ 300 million loan for energy sector development

In other Press release Released on Friday, the AfDB approved a political loan of $ 300 million to help the government ensure financial stability, governance and overcome obstacles in the political infrastructure of Pakistan’s energy sector.

“The financing will support the first of three sub-programs totaling $ 1 billion under the Energy Sector Reforms and Financial Sustainability Agenda, a key component of a comprehensive, multi-donor economic reform program led by the IMF.” , he added.

“The country’s economy will grow more slowly”

In a report Released in September, the AfDB reaffirmed that the country’s economy is expected to grow more slowly than last year, with GDP growth projected at 2.8 percent in FY2020.

The report notes that economic growth in Pakistan slowed down in fiscal year 2019; this reflected “a decline in investment in a context of political uncertainty and persistent macroeconomic imbalances”.

The report pointed out that the rise in inflation “mainly reflects the depreciation of the currency and a considerable increase in domestic fuel prices.”

“To restore macroeconomic stability, the government plans to catalyze significant international financial support and promote sustainable and balanced growth as part of a three-year stabilization and economic reform program with the International Monetary Fund (IMF). public debt while increasing social spending, establish a flexible exchange rate regime to restore competitiveness and replenish official reserves, “he added.