ADB concedes 22pc of loan projects in Pakistan facing risks

ISLAMABAD: Amid decreasing disbursements from $2.28 billion in 2019 to $1.7 billion in 2020 for Pakistan, the Asian Development Bank (ADB) has conceded that almost 22 percent of its existing portfolio of 46 ongoing projects are categorised for facing risks.

The ADB also provided $500 million financial support to Pakistan for pandemic response. According to the annual report released on Tuesday, the Manila based financial institution dwelt upon regarding operational challenges in Pakistan and stated that the COVID-19 pandemic continues to pose a major health care and economic challenge to Pakistan.

Continued efforts toward fiscal consolidation and policy reforms will be key to sustaining improvements in macroeconomic stability, especially in broadening the tax base and improving the business environment. Furthermore, reforms are required to promote high value-added exports, expand social spending, reinforce energy sector financial and technical sustainability, and implement structural changes that will strengthen institutions and create jobs.

Talking about future direction, the report states that ADB will support Pakistan’s development priorities as outlined in the bank’s new country partnership strategy, 2021–2025. The strategy focuses on improving economic management, building resilience, and boosting competitiveness and private sector development.

ADB’s assistance will comprise support for structural reforms and project assistance in key sectors, including energy, transport, irrigation, agriculture, urban infrastructure and services, small and medium-sized enterprises, and social development. The bank will also mobilize private financing, expand its own financing and technical assistance for public–private partnerships, and explore guarantee products to help the government leverage more financing and support capital market development. Pakistan’s growth prospects have been influenced by COVID-19 challenges. ADB’s lending will include policy support for the energy sector and capital market as well as trade and competitiveness to return the economy to a sustainable growth trajectory

The ADB report stated Pakistan is a founding member of the ADB in 1966. ADB has since committed over $36.31 billion to promote inclusive economic growth and improve the country’s infrastructure, energy and food security, transport networks, and social services.

Aligned with the Government of Pakistan’s development vision, ADB’s new country partnership strategy, 2021–2025 focuses on three priorities: improving economic management, building resilience, and boosting competitiveness and private sector development.

Since 1966, ADB has committed $34.36 billion in sovereign loans, $150.5 million in grants, $1.01 billion in nonsovereign financing, $203.7 million in technical assistance projects, and $591 million in ADB-administered cofinancing for Pakistan. Cumulative loan and grant disbursements to Pakistan amount to $26.96 billion. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds.

In 2020, ADB’s loan and grant disbursements to Pakistan amounted to $1.78 billion, comprising $1.1 billion in program lending and $680.7 million from project lending. ADB provided significant and rapid support to Pakistan’s coronavirus disease (COVID-19) pandemic response. This included a $500 million loan under the bank’s COVID-19 Active Response and Expenditure Support Program to help the government deliver social protection programs.

The funds were channeled through the government’s flagship poverty alleviation program, Ehsaas, to expand health sector capabilities and deliver fiscal stimulus to boost economic growth and create jobs. ADB also approved $2 million from its Asia Pacific Disaster Response Fund and $3 million through regional technical assistance to help Pakistan purchase personal protective equipment and other emergency medical supplies. The bank and the Swiss Agency for Development Cooperation co-financed $1 million to train 4,500 doctors and paramedical staff in COVID-19 critical care.

ADB committed $300 million in emergency assistance and $5 million from Norway to strengthen Pakistan’s public health system and help meet the basic needs of the poor and vulnerable. The bank also reallocated $30 million from the National Disaster Risk Management Project to support the country’s pandemic response, while the National Disaster Risk Management Fund allocated an additional $20 million from interest earned. In other measures, ADB provided a $300 million policy-based loan to strengthen Pakistan’s finance sector, develop competitive capital markets, and encourage private sector investment. The bank also committed a $300 million policy-based loan to help promote macroeconomic stability by improving trade competitiveness and diversifying exports.