ADB plans to lend additional $700m loan to Pakistan

KARACHI: The Asian Development Bank (ADB) has planned to lend an additional $500 million to $700 million in loans to Pakistan before the year end to help shore up the country’s flood-hit economy, a top official of the regional lender said on Thursday, taking the expected new total funding to $2.2 billion in 2022.

“More specifically, we are developing a package of $500 million to $700 million for immediate relief assistance, early recovery, rehabilitation and reconstruction, which is in addition to $1.5 billion countercyclical support to mitigate the impact of rising food prices and other external shocks on the poor and vulnerable,” said Yevgeniy Zhukov, ADB director general for Central and West Asia, at a virtual press briefing on Thursday. “We are trying to prepare a strong response to deal with the effects of recent floods.”

Zhukov said the entire amount under the new package would be given via a combination of loans, grants and concessional assistance. However, he didn’t spell out the terms of the assistance package. “The package … we believe will be on attractive financial terms for the government of Pakistan,” he said.

The development lender initially approved a $3 million grant from the Asia Pacific Disaster Response Fund for urgent relief and rehabilitation measures. Zhukov said Pakistan’s continuous engagement with the IMF would help the country get $1.5 billion under the countercyclical support facility - a budget support instrument. “If we talk specifically about the countercyclical facility, we indeed closely collaborate with the World Bank and IMF, so we do want Pakistan’s IMF programme to be on track. This will facilitate our investments.”

He said findings of damage and a needs assessment report to be prepared by a team of experts from the World Bank, the United Nations Development Program and ADB would guide the lender’s longer-term assistance plan strategy for Pakistan. “We expect that this assessment will be finalised in the mid of next month and the report will determine any further support for the flood-damaged economy.” He said the lender “is considering provisions of funds to respond to flood-related disasters by looking at various lending and ground modalities that provide affordable rates and conditions for Pakistan in current circumstances.”