Pakistan, ADB agree to implement $6bln loan program

ISLAMABAD: Pakistan and Asian Development Bank (ADB) on Friday agreed in principle to kick-start implementation of three-year country partnership strategy (CPS) program with loan portfolio of $6 billion for various economic sectors.

“The CPS for Pakistan from 2019-20 to 2021-22 will provide lending for energy, trade, competitiveness and other sectors during next three years period,” a senior official said.

The official told The News that the upcoming CPS will kick in from the next fiscal year. The ADB plans to provide $2 billion lending to Pakistan every year for the next three years under the program.

Pakistan supported an idea of combining sovereign and private lending under the umbrella of the ADB, the official said, citing a meeting between an ADB’s delegation and Minister for Finance Asad Umar. The delegation comprised of Executive Director Shahid Mahmood, Director General (Central and West Asia Department) Werner Liepach, Director General (Private Sector Operations) Michael Barrow and Country Director Xiaohong Yang.

Umar said the government is keen to devise innovative financing model, develop capital markets and mobilise private sector investment in infrastructure and social sector.

“These initiatives will not only provide fiscal space to the government but will also be helpful to boost economic activities in the country,” he was quoted as saying in a ministry’s statement.

Finance minister acknowledged the ADB’s support for development of Pakistan and discussed the priorities areas and new avenues for future interventions. He appreciated the proactive approach of Pakistan Resident Mission (PRM) and suggested to further enhance the role and capacity of PRM.

The cash-strapped country is slashing its expenditures to contain swelling fiscal deficits. It cut development spending to Rs675 billion for the current fiscal year and decided to keep it at the same level for the next fiscal year that would suppress growth and bring it down to projected 4.1 percent from 5.8 percent in FY2018.

The delegation of Manila-based lender expressed interest in improving its private sector operations through development of capital market and local currency financing. It said the country has a lot of potential for private investment.

Mahmood reiterated ADB’s commitment to further strengthen and expand its partnership with Pakistan. Liepach affirmed ADB’s readiness to scale up its lending to Pakistan including development policy credit and project financing. The official said ADB supports the public-private partnerships (PPP) initiatives in the country which play an important role in bridging the huge infrastructure investment gap. ADB may provide transaction advisory services associated with the development and implementation of PPP projects, he added.

Meanwhile, Pakistan and Iran have reiterated their desire to enhance bilateral trade which would greatly benefit the two neighbouring countries. This was discussed at a meeting between the visiting Managing Director of Iranian Foreign Investment Company (IFIC) Hassan Abghari and Finance Minister.

Finance Minister informed the MD IFIC Pakistan wants great economic engagement with Iran and assured him of Pakistan’s support to facilitate bilateral trade.

Umar said there was tremendous potential of improving economic cooperation and both countries are required to capitalise on the existing opportunities in the area of bilateral trade.

The minister also apprised Abghari about the initiatives being taken by Pakistan for the benefit of the border community. “The government has directed the relevant quarters to take measures for facilitation of the border trade which will be beneficial for both sides,” he said in a separate statement. The meeting agreed to address the obstacles being faced by the two countries in the area of trade.