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April 14, 2020

ADB to lend $800 million to Pakistan for COVID-19 response

Business

April 14, 2020

ISLAMABAD: The Asian Development Bank (ADB) has agreed to lend $800 million to Pakistan to help the country combat challenges posed by the novel coronavirus, The News learnt on Monday, after the lender tripled its pandemic response size in the region to $20 billion.

A top official of economic affairs division said ADB agreed in principle to process a loan worth $500 million and another one of $300 million for Pakistan to provide stipends to poor segment of the society through Ehsaas program and procure health equipment and facilities for fighting against the virus.

“These two loans of $800 million will be approved within the current fiscal year,” the official said, requesting anonymity.

ADB’s spokesman Ismail Khan didn’t disclose the financial envelop for Pakistan out of the $20 billion, but he said: “ADB has moved swiftly to support Pakistan with emergency relief assistance to combat COVID-19”. “The bank remains committed to support country’s rapid economic recovery and revival of growth trajectory,” Khan said. Manila-based lender tripled the size of its response to the novel coronavirus disease (COVID-19) pandemic to $20 billion and approved measures to streamline its operations for quicker and more flexible delivery of assistance. ADB so far provided $52.5 million, including $50 million loan and $2.5 million grants in the aftermath of outbreak of COVID-19 virus.

The package expands ADB’s $6.5 billion initial response announced on 18 March, adding $13.5 billion in resources to help ADB’s developing member countries counter the severe macroeconomic and health impacts caused by COVID-19. The $20 billion package includes about $2.5 billion in concessional and grant resources.

“This pandemic threatens to severely set back economic, social, and development gains in Asia and the Pacific, reverse progress on poverty reduction, and throw economies into recession,” a statement cited ADB President Masatsugu Asakawa as saying. “Our expanded and comprehensive package of assistance, made possible with the strong support of our board, will be delivered more quickly, flexibly, and forcefully to the governments and the private sector in our developing member countries to help them address the urgent challenges in tackling the pandemic and economic downturn.”

ADB’s most recent assessment, released on 3 April, estimates the global impact of the pandemic at between 2.3 percent and 4.8 percent of gross domestic product. Regional growth is forecast to decline from 5.2 percent last year to 2.2 percent in 2020.

The new package includes the establishment of a COVID-19 pandemic response option under ADB’s countercyclical support facility. Up to $13 billion will be provided through this new option to help governments of developing member countries implement effective countercyclical expenditure programs to mitigate impacts of the COVID-19 pandemic, with a particular focus on the poor and the vulnerable. Grant resources will continue to be deployed quickly for providing medical and personal protective equipment and supplies from expanded procurement sources.

Some $2 billion from the $20 billion package will be made available for the private sector. Loans and guarantees will be provided to financial institutions to rejuvenate trade and supply chains. Enhanced microfinance loan and guarantee support and a facility to help liquidity-starved small and medium-sized enterprises, including those run by female entrepreneurs, will be implemented alongside direct financing of companies responding to, or impacted by, COVID-19. The response package includes a number of adjustments to policies and business processes that will allow ADB to respond more rapidly and flexibly to the crisis. These include measures to streamline internal business processes, widen the eligibility and scope of various support facilities, and make the terms and conditions of lending more tailored.