The Economic Affairs Division of Pakistan has signed an agreement with the Asian Development Bank (ADB) worth $1.3 billion for budgetary support and reforms.
Hammad Azhar, Minister for Economic Affairs witnessed the loan signing of two program loans amounting to USD 1.3 Billion between the Government of Pakistan and the Asian Development Bank. The loan agreements were signed by Dr. Syed Pervaiz Abbas, Secretary, Economic Affairs Division and Ms. Xiaohong Yang, Country Director, Asian Development Bank (ADB).
Under the Special Policy-Based Loan (SPBL) Facility, Asian Development Bank has committed to providing USD 1 billion for Economic Stabilization Program.
- This program aims to improve exchange rate management.
- Strengthen public financial management to mobilize more revenues.
- Restore allocative efficiency of scarce public resources
- Address the power sector pricing issues
- Reduce the social impacts of macroeconomic stability measures by improved targeting and transparency of existing social protection programs.
Out of the total USD 1.3 billion loan, US$ 300 Million is allocated to Energy Sector Reforms & Financial Sustainability Program (Subprogram 1). It will address issues regarding energy shortfalls, technical lacunas and policy-related shortcomings in Pakistan’s energy sector.
- The program will help to secure financial sustainability by controlling the new accumulation of circular debt
- Strengthen governance by rationalizing competitive market roadmap.
- Separation of policy and regulatory functions in hydrocarbons sector
- Appointment of appellate tribunals, implementation of multi-year tariffs and unbundling of gas sector
- Reinforce infrastructure improvements through integrated planning to facilitate public and private sector investment across the energy supply chain.
Mr. Muhammad Hammad Azhar, Minister for Economic Affairs acknowledged ADB’s continued support for Pakistan. The Minister expressed that ADB’s policy-based lending will not only strengthen the foreign exchange reserves but will also provide fiscal space to the government for implementing its reforms agenda and boost economic activities in the country. The provision of program lending by the Asian Development Bank is indicative of government successful policies for macroeconomic stability and reforms, he added.
Ms. Xiaohong Yang, Country Director stated that ADB is one of the leading development partners of Pakistan. ADB fully supports the government’s development vision and policies. She expressed that ADB is providing its support to the government for policy reforms and project financing in the key priority areas such as energy, road, social sector, water & irrigation and urban services.