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Express Tribune
14 hours ago
- Business
- Express Tribune
ADB approves $800M financial package for Pakistan
Listen to article The Asian Development Bank (ADB) has approved an $800 million financial package for Pakistan under the Resource Mobilization Reform Program (Subprogram-II). According to the Ministry of Finance, the package includes a $300m policy-based loan (PBL) and a $500m program-based guarantee (PBG). This significant development is the result of joint diplomatic efforts by the Ministry of Economic Affairs and the Ministry of Finance. The initiative aims to enhance domestic resource mobilization and stabilize the economy through financial reforms, ministry officials said. They added that the support will help improve the tax system, increase revenues, and promote fiscal discipline. The program is also expected to broaden the country's revenue base and marks a key step toward economic self-reliance. Read ADB board meets on June 3 to approve $800m Pakistan package According to Asian Development Outlook Annual Report 2025, Pakistan's real gross domestic product (GDP) is expected to grow by 2.5% in the fiscal year 2025, maintaining the same growth rate as in FY2024. ADB projects that Pakistan's growth will increase to 3.0% in FY20. 'Pakistan's economy has benefitted from improved macroeconomic stability through robust reform implementation in areas such as tax policy and energy sector viability,' said ADB Country Director for Pakistan Emma Fan. 'Growth is projected to persist in 2025 and to increase in 2026. Sustained implementation of policy reforms is vital to buttress this growth trajectory and fortify fiscal and external buffers.' Previously, ADB had postponed the approval of a $800m financing package for Pakistan for five days on the request of India that sought time to evaluate the loan documents, exposing flaws in the lender's rule book that allows such extensions. The meeting was rescheduled to June 3, government officials added. Read More: Pakistan, ADB partner to boost climate resilience When contacted, Economic Affairs Secretary Dr Kazim Niaz confirmed that the ADB board meeting was scheduled for May 28 but has been postponed for five days on the request of the Indian executive director. The secretary said that under the ADB rules any director can seek a one-time extension on the date and India took the benefit of this rule. ADB country office did not respond to a request for comment on the development. The Indian move came after it failed to block the approval of the $1 billion worth second loan tranche by the International Monetary Fund. The postponement by ADB underscores that Pakistani representatives in the World Bank, the IMF, the Asian Infrastructure Investment Bank and the ADB will have to adopt a proactive approach to protect the country's economic interests. Also Read: India approves stealth jet plan amid tensions with Pakistan After facing defeat at the hands of the armed forces in the battlefield, India has started lobbying against Islamabad's economic interests. The five-day postponement has not impacted Pakistan's external financing plans and the money is expected to flow in the central bank's accounts after the approval by the board on June 3rd. Tensions between India and Pakistan escalated on April 22, after an attack in Pahalgam area of Indian-Ilegally Occupied Jammu and Kashmir (IIOJK) killed 26 people. India blamed Pakistan for the incident without providing any evidence. Islamabad denied India's claims and called for an independent probe. India then suspended the 65-year-old Indus Waters Treaty, cancelled visas, and closing border crossings leading to tit-for-tat measures by Pakistan. The military engagement further intensified with missile strikes on May 7 targeting several cities in Punjab and Azad Jammu and Kashmir, followed by Pakistan downing Indian warplanes. As hostilities increased, both countries launched military strikes, with India hitting Pakistani airbases and Pakistan retaliating by damaging Indian missile storage sites and other strategic targets. By May 10, US-led diplomatic efforts resulted in a ceasefire agreement, though both countries continue to engage in a war of narratives.
Express Tribune
6 days ago
- Business
- Express Tribune
ADB board meets on June 3 to approve $800m Pakistan package
The Asian Development Bank (ADB) has postponed the approval of a $800 million financing package for Pakistan for five days on the request of India that sought time to evaluate the loan documents, exposing flaws in the lender's rule book that allows such extensions. The government officials told The Express Tribune that the ADB board meeting had been convened for May 28th to approve the $300 million budget support loan and another $500 million in guarantees to obtain foreign commercial loans. The meeting did not take place on Wednesday and Pakistan had been informed in advance. The meeting has been rescheduled to June 3, the government officials added. When contacted, Economic Affairs Secretary Dr Kazim Niaz confirmed that the ADB board meeting was scheduled for May 28 but has been postponed for five days on the request of the Indian executive director. The secretary said that under the ADB rules any director can seek a one-time extension on the date and India took the benefit of this rule. The ADB country office did not respond to a request for comment on the development. The Indian move came after it failed to block the approval of the $1 billion worth second loan tranche by the International Monetary Fund. The postponement by the ADB underscores that the Pakistani representatives in the World Bank, the IMF, the Asian Infrastructure Investment Bank and the ADB will have to adopt a proactive approach to protect the country's economic interests. After facing defeat at the hands of the armed forces in the battlefield, India has started lobbying against Islamabad's economic interests. The five-day postponement has not impacted Pakistan's external financing plans and the money is expected to flow in the central bank's accounts after the approval by the board on June 3rd. Independent economic analysts say that the government should reduce its reliance on the foreign loans, particularly on budget support loans. The ADB's $800 million package is not meant for any development purposes and the money and guarantees will be used to build the foreign exchange reserves. Dr Niaz said that there was no lapse on part of the federal government or its nominee in the board, as the ADB rules allowed the extension. He said that when India sought the postponement of the board meeting, the government took up the matter at the highest level in the ADB. The management and almost all the board directors had supported the view point of Pakistan, which resulted in taking the next date for the board meeting, said the secretary. Pakistan's view was that the international forums cannot be used for settling the political scores of the member countries, he added. The government had reached an understanding with two foreign commercial banks for a $1 billion loan on the back of the ADB's guarantees due to its low credit rating. The final term sheet and loan disbursement are subject to the approval of the ADB's $500 million guarantee. Pakistan can borrow up to $1.5 billion foreign commercial loan against the $500 million guarantee, said government sources. Pakistan's gross reserves stand at $11.4 billion, which the government wants to increase to over $14 billion by the end of June. The reserves will rise on the back of better-than-expected remittances, $1 billion ADB-backed new commercial loan and the refinancing of Chinese loans, the sources said. The ADB will charge a nominal upfront fee for giving the guarantee. Despite a recent rating upgrade, Pakistan's credit rating still remains low at B negative, which are two notches below the investment grade. Fitch upgraded Pakistan from a substantial default risk to a high risk of default rating. For the current fiscal year, the government has budgeted $3.8 billion in foreign commercial loans but the disbursements remain low due to the low credit rating. China is expected to refinance the $3.7 billion commercial lending before the end of next month. The ADB's $300 million policy loan is the second tranche under the Resource Mobilization programme, which the government wants to take for improving the tax collection by the Federal Board of Revenue. However, there has been criticism for taking loans for purposes, which do not require foreign funding. Pakistan has met all the prior conditions for securing the second loan tranche from the ADB. The ADB's local office spokesperson had been requested to comment about the change in schedule of the board meeting and whether the ADB can allow its platform to be used by the member countries for achieving their political objectives. The people privy to the working of the ADB said that any member, including Pakistan, can request a delay for two working days to undertake more due diligence for any loan.
Business Recorder
7 days ago
- Business
- Business Recorder
NA body informed: Govt decides to launch M-6 project on a priority basis
ISLAMABAD: The National Assembly Standing Committee on Economic Affairs was informed on Tuesday that government has decided to launch the Motorway (M6) on a priority basis in the development programme of the next fiscal year. Officials from the Ministry of Economic Affairs informed the committee that the ministry had proposed foreign financing of Rs500 billion. The ministry estimates that a rupee cover will be required for financing of Rs400 billion. The meeting of the Standing Committee was held under the chairmanship of Atif Khan, which was informed that negotiations are underway with the Islamic Development Bank and the Saudi Fund for financing the motorway. Secretary Economic Affairs Division Dr Kazim Niaz said that launching the M6 Motorway is currently the government's top priority. The Islamic Development Bank will provide $500 million for two sections of the M6 Motorway. Talks are being held with the OPEC Fund and the Saudi Fund for Development for other sections. Talks are also being held with the Asian Development Bank (ADB). It is hoped that the Saudi Fund for Development will take up one section. Committee member Mirza Ikhtiar Baig said that the development of Karachi and Sindh depends on these two projects. The real purpose of building the motorway will be fulfilled by connecting the motorway with the port. The secretary Economic Affairs Division said that a new Country Partnership Strategy is being prepared with the Asian Development Bank. The committee was informed that important projects will be completed in the next fiscal year to improve the electricity transmission system. The committee was also informed that $460 million financing was available for Khyber Pakhtunkhwa Economic Corridor. The provincial government has to take several steps to get funding from the World Bank. This is an important project, the provincial government should resolve all issues quickly, secretary Economic Affairs Division added. In the last three years, short-term debt has been reduced and long-term debt has increased, he added. As the country's economic situation has improved, it has also become easier to obtain loans and set terms. Commercial loans are available for short periods and at high interest rates. In the last three years, the debt-to-GDP ratio has decreased to 67 percent, the secretary EAD added. The committee postponed the briefing on development projects in the absence of the planning minister and planning secretary. The Power Division has 82 development projects, said Special Secretary Power Division Arshad Majeed. Of these, 77 percent of the financing is allocated for transmission projects. Most of the projects of the Power Division are being carried out by NTDC, said Majeed. We thought that power generation would increase, said NTDC officials, adding that due to solarisation, the demand for power has decreased in the last five years. Copyright Business Recorder, 2025
Business Recorder
14-05-2025
- Business
- Business Recorder
Pakistan, Japan sign $3.5mn agreement for installation of smart water meters
The Government of Japan approved on Wednesday an amount of JPY 510 million ($3.5 million) for Economic and Social Development Program for Provision of Smart Water Meters for improved water supply in Faisalabad. In a press release, the Ministry of Economic Affairs said that the installation of around 8,000 smart water meters in Faisalabad will not only enhance the efficiency of water usage and distribution, 'but also contribute to better demand management, conservation of precious water resources and financial sustainability of Water and Sanitation Agency Faisalabad'. Pakistan-Japan Human Resources Stakeholders meeting held The statement said that this grant aligns with the government's vision for improved urban governance and environmental sustainability, and 'we are confident that it will serve as a model for replication in other cities as well'. The exchange of notes were signed and exchanged by Secretary, Ministry of Economic Affairs, Dr Kazim Niaz, and Ambassador Extraordinary and Plenipotentiary of Japan to Pakistan, Akamatsu Shuichi, on behalf of their respective governments. Dr Kazim Niaz, appreciated Japan for their valuable support with the assurance of extending all necessary facilitation to ensure the successful implementation of the project and for more meaningful cooperation between the two sides. Moreover, Shuichi assured the commitment of his government to work closely with Pakistan to further strengthen the friendly ties and bilateral cooperation.
