The Asian Development Bank (ADB) has approved an emergency loan of $1 billion for Pakistan to provide immediate support to the country's finances and help strengthen a slumping economy, according to a statement issued on Friday.
The quick dispersing loan is part of a "comprehensive multi-donor economic reform program" that is being spearheaded by the International Monetary Fund (IMF) to stabilize Pakistan’s economy.
The country's economy had crumbled in 2018 after foreign investments shrunk upon being faced with an uncertain political and global economic environment. The continued weak performance of state-owned enterprises had also let to a rise in public debt.
The loan was approved after the Pakistan government implemented a series of reforms and actions, supported by IMF, to improve the country's "current account deficit, strengthen its revenue base, and protect the poor against the social impact of the economic crisis".
A news article posted by ADB quotes the Bank's Director General for Central and West Asia, Werner Liepach: “These funds will meet the government’s emergency financing needs to prevent significant adverse social and economic impacts and lay the foundations for a return to balanced growth.”
The IMF, in July, had approved a 3-year $6 billion Extended Fund Facility (EFF) to finance the government’s economic reform program. The EFF is expected to catalyze at least $38 billion in financing from Pakistan’s development partners.
"ADB has committed to provide a total of $2.1 billion in policy-based lending during fiscal year 2019–2020 to support the reform program," says the same report.
The development comes after the ADB in September reaffirmed that the country's economy is expected to grow slower than last year, with GDP growth projected at 2.8 per cent in the fiscal year 2020.
It highlighted that rising inflation was "mainly reflecting currency depreciation and a considerable increase in domestic fuel prices".
In another report released by the ADB on Friday, the Bank said that it had approved a $300 million policy-based loan to help the Pakistan government "address financial sustainability, governance, and energy infrastructure policy constraints" in the energy sector.
"The financing will support the first of three subprograms totaling $1 billion under the Energy Sector Reforms and Financial Sustainability Program," it added.
(With inputs from IANS)