Pakistan tops ADB borrowers with $12bln outstanding in 2019

KARACHI: Pakistan was among the top 3 borrowers of the Asian Development Bank (ADB) last year with the country’s outstanding loan exceeding $12 billion, a bank’s document showed.

The document related to sovereign country exposure showed that the sum of disbursed and outstanding loan balances, present value of guaranteed obligations and fair values of equities amounted to $12.3 billion – 11 percent of total exposure – as of December 31, 2019, compared to $10.8 billion or 10 percent in 2018. ADB said the three largest borrowers— China, India, and Pakistan— represented 43 percent of the portfolio in 2019.

China and India had almost an equal outstanding loan positions last year with $17.7 billion and $17.3 billion, respectively. The exposures accounted for 16 percent each, according to the document.

ADB’s 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.

Last year, ADB approved a policy-based lending for Pakistan – the first country that accessed this window of ADB and obtained $1 billion budgetary support in order to avert balance of payment crisis – after the IMF loan agreement. The lender tied this loan to an IMF’s support.

International Monetary Fund’s (IMF) agreed to a loan program to introduce structural reforms in Pakistan imperiled by current account deficit. It was the country’s 13th IMF loan since 1980s and one that started following another one that completed successfully in 2016. The latest $6 billion extended fund facility was agreed following months long discussion between Pakistani authorities and the IMF staff. The program was needed to finance external account gap and to muster trust of other development partners for growth policies. IMF’s facility, as expected, turned on stagnant stream of foreign inflows with other financial institutions contributing to the funding.

In April, ADB expected Pakistan’s growth to decelerate at 2.6 percent during the current fiscal year from 3.3 percent a year earlier as the novel coronavirus effects posed downside risks to the economy already reeling under stabilisation measures. “Pakistan’s strong and decisive policy measures have started to yield positive results in reversing macroeconomic imbalances and narrowing current account deficits,” ADB Country Director for Pakistan Xiaohong Yang said at the launch of ADB’s latest annual flagship economic publication, Asian Development Outlook 2020. “Although Pakistan's economy is in better shape than before, the nation needs to work together to tackle the new challenges posed by COVID-19—including uncertain short term growth prospects—and its related socioeconomic repercussions.”