Wednesday May 29, 2024

Largest recipient among 40 nations: Pakistan receives $5.58bn loans from ADB in 2022

Bank’s annual report shows amounts received included $2.67bn concessional funding

By Mehtab Haider
April 25, 2023
Asian Development Bank (ADB) headquarters. — Official Website
Asian Development Bank (ADB) headquarters. — Official Website

ISLAMABAD: Pakistan has become the largest recipient of Asian Development Bank (ADB)-funded programs/ projects in the year 2022, as out of total disbursement of over $31.8 billion to 40 countries, Pakistan received loans of $5.58 billion.

Out of the total lending of $5.58 billion, Pakistan received concessional funding of $2.67 billion from the bank in last year.

According to the ADB Annual Report 2022, released on Monday, the bank provided timely responses to emerging and ongoing crises in the Asia and Pacific region. That included a combined $2.2 billion, directed through the bank’s countercyclical support facility, for the Kyrgyz Republic, Mongolia, Pakistan, Tajikistan, and Uzbekistan — all severely impacted by the food and energy crisis, sparked by the Russian invasion of Ukraine, and in the case of Pakistan, devastating floods.

Moreover, ADB disbursed $10.5 million in emergency support to Tonga following a nearby volcanic eruption and subsequent tsunami, and $71.4 million for Bangladesh to meet the urgent basic needs of displaced people from Myanmar in the Cox’s Bazar district.

Expanding the mechanism’s geographic coverage, ADB continued Energy Transition Mechanism (ETM) efforts in the Philippines and Vietnam, and commenced pre-feasibility studies in Kazakhstan and Pakistan.

Under a project covering India, Indonesia, Pakistan, Thailand, and Vietnam, the ADB is helping finance the crop inventories of over 50,000 smallholder farmers, undertake an assessment of climate risk vulnerability, and increase the participation of women in climate-resilient farming.

Another project, in Nepal, will benefit 30,000 farming households by helping develop climate-resilient orchards and deliver livelihood and climate adaptation training for growers.

In Sri Lanka, for example, food price inflation and a broader economic crisis exposed an estimated 8.2 million people to the prospect of having inadequate food.

In Pakistan, extreme floods damaged over one-third of the Kharif (summer) seasonal cropping area, curtailing food supply and driving up prices. In Afghanistan, drought and flash floods worsened food insecurity and contributed to soaring prices of staple items, which impacted the entire population.

ADB committed $3.7 billion from the programme in 2022, including essential food assistance for those in need, including women and girls, in Afghanistan (using United Nations systems), Pakistan, and Sri Lanka.

Afghanistan and Pakistan were severely impacted by rising food and energy prices, exacerbated by the Russian invasion of Ukraine, triggering domestic inflation and curtailing consumption.

Highlighting the region’s vulnerability to climate change, Pakistan was also hit by devastating floods that killed more than 1,730 people, directly affected 33 million people, caused damages in billions of dollars, and worsened an already fragile economic situation.

As well as delivering a substantial emergency response for Pakistan during 2022, the ADB supported post-pandemic green growth and increased resilience to both short- and long-term challenges in its developing member countries (DMCs) of Central and West Asia.

The bank committed financial resources totalling $6 billion for the region in 2022, comprising $4.8 billion in sovereign financing and $1.2 billion in non-sovereign investments.

ADB’s support during the year included $2.1 billion through the bank’s Building Resilience with Active Countercyclical Expenditures (BRACE) programs. This helped Pakistan navigate the economic impacts of the Russian invasion of Ukraine and extreme flooding, and provided a buffer to shore up government budgets in the Kyrgyz Republic, Tajikistan, and Uzbekistan.

In the wake of devastating floods in Pakistan, resulting in recovery and reconstruction needs estimated at $16.3 billion, the ADB worked swiftly to provide immediate support for the victims. It disbursed a $3 million grant under the Asia Pacific Disaster Response Fund in September and ensured supply of emergency food supplies, tents, and other relief items.

The bank followed that emergency support by committing a further $449 million for direct and comprehensive flood support. Comprising a loan, technical assistance, and repurposed financing, the package covers reconstruction of 485 kilometres of vital roads and around 30 bridges. It is also helped restore and upgrade irrigation and drainage structures and strengthened flood risk management.

In October, the ADB provided Pakistan with $1.5 billion, along with $500 million in co-financing, through the Building Resilience with Active Countercyclical Expenditures Programme. This support is helping the government counter rising food prices and strengthen food security, shore up employment, and enhance social protection for the poor and vulnerable people, many of whom were directly affected by floods.

Meanwhile, to improve health outcomes for Pakistani women, the ADB committed a $100 million loan for upgrading secondary hospitals in Khyber-Pakhtunkhwa, a province that suffers from a high infant mortality rate and maternal mortality ratio.

Among other objectives, the project would help modernise infrastructure for women’s health and provide more medical equipment for obstetrics departments. It also aims to ensure that at least 40pc of doctors working at secondary healthcare facilities are women. In addition, the ADB investment supports training for healthcare staff on gender-based violence and gender-oriented clinical protocols. It is expected to benefit an estimated 38 million people.

In Pakistan, the ADB signed a $300 million loan to further develop capital markets, promote private investment, and help mobilise domestic resources. The loan supports policy actions to strengthen market stability and attract investor capital, including structural reforms within the Securities and Exchange Commission of Pakistan. By making Pakistan’s capital markets more robust and strengthening government debt management, the programme helped underpin the financing of sustainable growth.

Throughout 2022, the ADB continued to help financial institutions further embrace opportunities in both green finance and women’s entrepreneurship. The bank funded research on the constraints of Pakistan’s financial institutions to lend to women for green purposes, and piloted a programme in Papua New Guinea to identify solutions that enable women lacking credit history to borrow.