Pakistan’s growth prospects bank on IMF-backed reforms: ADB

KARACHI: Asian Development Bank (ADB) has ascribed Pakistan’s growth prospects with ongoing IMF-backed reforms aimed at fiscal consolidation and development initiatives to uphold economic stability.

In a latest country’s factsheet, Manila-based lenders said reforms initiated by the International Monetary Fund’s (IMF) stabilisation program along with projects under Central Asia Regional Economic Cooperation Program, the China-Pakistan Economic Corridor, and other development initiatives “will continue to influence Pakistan’s growth prospects”.

“Pakistan has been experiencing fiscal and current account deficits,” said ADB. “Continued efforts toward fiscal consolidation will be key to sustaining improvements in macroeconomic stability.”

Last year, IMF agreed to lend $6 billion, guiding structural changes to help Pakistan come back to growth track after having decelerated to inflows’ paucity mode. The second review was differed last month to keep on hold the disbursement of third tranche.

ADB underscored needs of broadening of tax base, improvement in business environment, and reforms to promote high value-added exports, expand social spending, progress energy sector development, and strengthen institutions.

“To help improve Pakistan’s fiscal sustainability and create a better business environment, ADB will continue to engage in policy dialogue with the government on managing macroeconomic imbalances, while maintaining the momentum of structural reforms to support economic stability and expansion,” it added. “ADB will continue to support Pakistan through investments outlined in the country operations business plan, 2020-2022.”

Last year, the bank approved $7.1 billion under country operations business plan, 2020-2022 for Pakistan. The plan includes project loans; policy-based lending for structural reforms; multitranche financing facilities for energy, transport, water, and other urban infrastructure and services; and results-based lending for energy and social services.

ADB said its operations in the country focus on developing energy-efficient and climate-resilient transit systems and infrastructure, improving secondary education, enhancing technology-based agriculture, and advancing the energy sector. There is an ongoing portfolio of $2.2 billion covering energy generation, transmission, distribution, energy efficiency, and renewable energy development. The bank has disbursed $25.18 billion in cumulative loan and grant disbursements to Pakistan since 1966.

ADB is also supporting public-private partnership initiatives in the country to support the delivery of public infrastructure. The bank provides financial assistance to nonsovereign projects and financial intermediaries as a catalyst for private investments. Total commitments from ADB’s own funds (in equity and direct loans) in 2019 amounted to $3 billion for 38 transactions in economic and social infrastructure, the finance sector, and agribusiness. Last year, ADB mobilised $3.28 billion of long-term cofinancing and $3.69 billion of cofinancing in trade finance, microfinance, and supply chain finance programs. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $13.78 billion as of 31 December 2019.