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ADB says Pakistan holds potential for rapid economic growth

Business

March 5, 2021

ISLAMABAD: Pakistan has the potential for rapid economic growth and development with a youthful, growing population and strategic location, Asian Development Bank’s (ADB) official said.

“Under vision 2025, the country aims to achieve upper middle-income status and provide quality jobs to its growing labor force. But Pakistan has struggled with boom-and-bust cycles in previous years due to low export capacity, weak domestic revenue, and other systemic challenges,” ADB Country Director for Pakistan Xiaohong Yang said. “This has been exacerbated by the coronavirus disease (COVID-19) pandemic, which caused a sharp downturn in 2020 and is likely to push more people into poverty,” she said in an interview. “Pakistan has the potential to become a regional hub for trade and economic activity, but greater cooperation is impeded by weak connectivity and trade links.”

In response to the pandemic, ADB is taking major steps in providing critical finance for the government to implement its pro-poor fiscal and monetary policy, introducing best practice, building capacity, and sharing knowledge through close partnerships with all stakeholders. Manila-based lender financed and co-financed $2 billion loans to help Pakistan overcome the pandemic challenges. The ADB already endorsed a new country partnership strategy for 2021–2025, designed to help restore economic stability and growth.

Yang said ADB will deploy its sovereign and nonsovereign operations to support infrastructure, agribusiness, and finance sector investments. It will target reforms that boost competitiveness and private sector development, create jobs and drive market innovation. Recently issued local currency linked bonds will allow ADB non-sovereign operations to engage sectors like education, health and manufacturing. Yang said flagship projects such as the Turkmenistan–Afghanistan–Pakistan–India pipeline project and the Turkmenistan–Uzbekistan–Tajikistan–Afghanistan–Pakistan electricity project will contribute to Pakistan’s energy security. Sanitary and phytosanitary measures to promote agricultural trade will be improved and aligned with international standards. The country will also benefit from the development of regional and national tourism, as well as regional approaches to fighting pandemics.

ADB will seek to enhance productivity and well-being by improving education, nurtrition, health systems, clean water and sanitation, affordable housing, and social protection. ADB will promote system-wide reforms on skills development, and investments in secondary education with a special emphasis on increasing girls’ enrollment. The challenge of out-of-school children will also be addressed through support for Ehsaas Kafalat conditional cash transfers for primary education, targeting children, particularly girls, from poor and vulnerable households. ADB will also continue to support disaster risk reduction and management, including investments in irrigation infrastructure which will make Pakistan more resilient to water shortages, future flooding, and food security, said its country’s representative.