ADB says IMF support mandatory to resume policy lending

ISLAMABAD: The Asian Development Bank (ADB) has linked resumption of policy lending for Pakistan with a support from the International Monetary Fund (IMF) with which the south Asian country is currently negotiating its 13th bailout package since 1980s.

“We need IMF support for policy lending,” ADB’s Country Director for Pakistan Xiaohong Yang told media on Wednesday.

“The structural reforms in consultation with other multilateral financial institutions are being devised to overcome macroeconomic imbalances,” Yang said, while sharing seven priority areas in the next 10 years strategy.

ADB’s Country Director was accompanied with Director General for Strategy and Policy Tomoyuki Kimura. The ADB’s team was on a two-day visit to discuss key policy directions of ADB’s new corporate strategy and its importance to Pakistan’s development agenda.

They met with Finance Minister Asad Umar as well as private sector’s stakeholders.

The Manila-based lender, in collaboration with the government, is preparing a strategy to erase the circular debt pile-up. ADB will tackle both stocks and flows in order to stop its surge on permanent basis, the officials said.

On government’s preference to power sector’s reforms over privatisation, Kimura said ADB, based on its vast experience, believes privatisation is a tool to achieve an objective instead of a goal in itself.

“So if the government could improve efficiency the ADB does not have any problem,” he remarked.

On ADB’s involvement into China-Pakistan Economic Corridor projects, Kimura said infrastructure financing requirement in the Asian region stands at $1.7 trillion, while ADB’s portfolio is just $20 billion per annum.

“The ADB is not meant to support bilateral initiative… [we have] launched Carec (the Central Asia Regional Economic Cooperation) to support regional cooperation.”

Kimura said ADB supports the country’s agenda of diversifying exports to revitalise the economy and generate jobs.

“The strategy provides ADB with the framework and tools to tailor development finance, knowledge and partnerships to specific country needs,” a statement quoted him as saying.

“Strategy 2030 enables ADB to better respond to Pakistan’s changing development needs. ADB shares the government of Pakistan’s vision to accelerate sustainable and inclusive economic growth by promoting innovative technologies and delivering development solutions through a mix of public and private sector operations.”

Kimura further said the country’s strategic location presents vast opportunities to expand regional economic and market integration.

“The country needs to continue to improve key infrastructure, energy supply, domestic resource mobilisation, and the cost of doing business to ensure higher levels of competitiveness and productivity, and to link up with the global production networks and value chains.”

ADB’s Director General for Strategy and Policy asked the government to resolve structural impediments to economic development through reforms that revive and diversify exports for job creation.

“Pakistan needs to improve skills and labor market efficiency, enhance financial inclusion and promote greater infrastructure, investment and trade integration,” he added.