Fiscal consolidation, policy reforms needed for macroeconomic stability, says ADB

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Asian Development Bank (ADB) said that reforms are necessary to encourage high value-added exports, increase social spending, reinforce energy sector financial and technical sustainability, and implement structural changes that will reinforce institutions and create jobs. 

According to the Bank’s report, “Asian Development Bank member fact sheet,” the total outstanding balances and undisbursed commitments of ADB’s non-sovereign transactions in Pakistan as of 31 December 2021 was $441.31 million showing 3.14 percent of ADB’s total private sector portfolio. 

So far, ADB has committed 723 public sector loans, grants, and technical help adding $37 billion to Pakistan. Cumulative loan and grant disbursements to Pakistan amount to $28.27 billion. These were supported by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds. 

ADB’s current sovereign portfolio in Pakistan comprises 48 loans and 3 grants worth $8.42 billion. Last year, ADB’s loan and grant disbursements to Pakistan amounted to $1.31 billion, including $0.3 billion in program lending and $1.01 billion from project lending, and $3 million from grants. 

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The report added that constant efforts toward fiscal consolidation and policy reforms would be significant to sustaining improvements and enhancements in macroeconomic stability, particularly in broadening the tax base and improving the business environment. 

Moreover, the bank said that the COVID-19 pandemic continues to pose huge health and economic challenges to Pakistan. Reforms are needed to stimulate high value-added exports, reinforce the energy sector financially, expand social spending, and technical sustainability, and implement structural changes that will reinforce institutions and generate jobs, it added. 

ADB’s funding for Pakistan’s coronavirus disease (COVID-19) pandemic response in 2021 comprised a $500 million loan in August to help acquire and deploy a safe and effective vaccine, and a $603 million loan of which $3 million is from the ADF for an integrated social protection program to reinforce Pakistan’s flagship Ehsaas program. The loan is complemented by a $24 million grant from the Education Above All Foundation, the report added. 

The program develops on an earlier $500 million loan under ADB’s COVID-19 Active Response and Expenditure Support Program and a $300 million emergency assistance loan in order to strengthen Pakistan’s public health response to safeguard the poorest families from the pandemic. 

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