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Govt formulating policies to deal with budget, current account deficit: ADB

By Our Correspondent
April 18, 2019

ISLAMABAD: While indicating $11.129 billion committed loans remained un-disbursed so far, the Asian Development Bank (ADB) on Wednesday stated that Pakistan’s new government was formulating policies to deal with vulnerabilities of budget deficit and current account deficit in order to restore its economic growth.

In its annual report and financial report 2018 released by ADB on Wednesday showed that the total committed undisbursed loans for Pakistan stood at $11.129 billion till end December 2018. The current effective outstanding undisbursed loan amount is standing at $3.81 billion so far. Pakistani authorities when contacted to one top official of economic ministries, he argued that the existing portfolio of ADB stood at around $6 to $7 billion out of which $1.3 billion was budgeted to be disbursed during the current fiscal year including programme and project loans. As the programme loans are not yet being finalised so the project loan disbursement was targeted at $1 billion. So far the disbursement has been moving slowly and efforts are underway to accelerate this process in the remaining period of the current fiscal year, the official added.

However, the ADB report states that Pakistan posted lower growth in the fiscal year 2018, affected by challenges in the country’s balance of payments. A newly elected government, which took office in August 2018, has begun formulating policies to deal with Pakistan’s fiscal budget and current account deficits and restore its economic growth. Through its ongoing country programmes in Central and West Asia, ADB continued to help its developing member countries become more economically diverse, remove infrastructure bottlenecks, foster regional connectivity, generate inclusive growth, promote gender equality, and combat climate change

“Government needs to address falling foreign exchange reserves & rising debt obligations. Pakistan must continue to consolidate governance, increase exports & strengthen public enterprises” it added. Government should improve business and regulatory environments to attract more investment and increase productivity. ADB will continue to support Pakistan’s development through investments framework outlined for 2019–2021.

ADB to help use of smart technology and innovative approaches to achieving the Sustainable Development Goals. Pakistan’s current growth prospects will continue to be influenced by projects under CAREC, the China– Pakistan Economic Corridor, and other development initiatives. Programme will include policy support for the energy sector as well as improving trade and competitiveness. ADB will support the development of an export–import bank. ADB will continue to help government to manage external debt and balance of payments.

In Pakistan, the ADB states that the ongoing construction of a sustainable Bus Rapid Transit (BRT) corridor in Peshawar was about 70% completed by the end of 2018, with operations expected to begin in 2019. This innovative project includes 26km of dedicated bus way through the city, with an associated network of routes totaling over 80km. In Pakistan, the bank provided $275 million for an irrigation project in Jalalpur, Punjab province. This project will construct 200km of new irrigation canals to improve agricultural production of almost 80,000 hectares and benefit 200,000 rural people.

ADB also committed $100 million to Pakistan to enhance investment in public–private partnerships. In Pakistan, ADB’s health sector review in Khyber Pakhtunkhwa led to the development of a sector wide health plan for the province.

ADB conducted important analyses of economic corridors in Central Asia and Pakistan, and special economic zones in Kazakhstan, the Kyrgyz Republic, and Pakistan. It also developed analytical tools such as a district development monitor and an investment climate monitor for Pakistan. Country-specific knowledge products also delivered tangible benefits.

In Pakistan, a country programming and PPP seminar was conducted to enhance the understanding of PPPs among various stakeholders and reinforce ADB’s strong role in building the business case for such partnerships. ADB committed new investments in urban infrastructure and municipal management in several South Asian countries to improve the environment for private businesses. In India, the bank committed the third tranche of a financial intermediation loan to create a suitable environment for PPP projects in roads and renewable energy.

In 2009, ADB provided a long-term, US dollar denominated loan to Zorlu Enerji Elektrik Uretim to finance the construction of a $147 million 56.4-megawatt wind farm—Pakistan’s first wind power project.