ADB to Provide $10 Billion in Fresh Assistance to Pakistan for the Next 5 Years

The Asian Development Bank (ADB) has planned to provide Pakistan about $10 billion in fresh assistance for various development projects and policy-based programmes over the next five years under its new Country Partnership Strategy (CPS-2021-25).

This was revealed by senior officials at the Ministry of Economic Affairs, after Federal Minister for Economic Affairs Makhdum Khusro Bakhtyar held a virtual meeting with Shixin Chen, vice president of the ADB.

The secretary Economic Affairs Division and Xiaohong Yang, country director, ADB also joined the meeting. The meeting discussed key priorities of the CPS 2021-2025 expected to be considered by the ADB’s board of directors later this year.

The Country Operations Business Plan (2021-2023) and the ADB’s ongoing and support for Pakistan’s reforms programmes were also discussed. The vice president appreciated the government’s strategy to successfully combat the impact of the COVID-19 pandemic.

The vice president reiterated the ADB’s commitment to support the government’s reform agenda and to speed up the economic recovery process. The ADB plans to provide Pakistan about $10 billion in fresh assistance for various development projects and policy-based programmes over the next five years under its new Country Partnership Strategy.

According to documents the ADB’s new CPS (2021–2025) responds to the economic and social challenges thrown up by the pandemic and includes addressing the country’s persistent structural challenges.

The ADB’s assistance over the next five years will focus on supporting three interlinked pillars;

  • Improving economic management;
  • Building resilience;
  • Boosting competitiveness, and private sector development.

Pillar 1 – Improving Economic Management comprises on macroeconomic stabilization, domestic resource mobilization, PSE Reform, energy sector reform and financial market deepening.

Pillar 2 – Building Resilience comprises education and health, food security, clean water, affordable housing and social protection.

Pillar 3 – Boosting Competitiveness and Private Sector Development comprises livable cities, renewable energy and energy efficiency, rural infrastructure development, regional connectivity and access to finance.

Final allocation at the end of the CPS 5-year period will depend on available resources, project readiness, and the outcome of country assessments. These will be supplemented with the ADB’s non-sovereign operations and commercial co-financing, documents revealed.

It further revealed that the total indicative ADB assistance for COBP (2020-2022) was $7.1 billion.

Out of this $6.5 billion has been disbursed for various projects and policy-based programme loans.

In light of health-related challenges, the macro-economic impact of the COVID-19 pandemic, locust attacks and floods, the government’s priorities have changed.

Given that operational and financial challenges are expected to continue growing in an uncertain environment due to COVID-19, the government and the ADB have shifted development priorities to focus more on social sectors in the COBP 2021–2023 period. The ADB has indicated a resource allocation of approximately $6.3 billion for 44 projects under the new COBP; however, not a single project has been added from Balochistan.

Projects in the energy sector account for 29 percent, followed by the transport (16 percent), agriculture (14 percent) and financial sectors (13 percent).

Public sector management stands at eight percent share; whereas, the social sector accounts for over 10 percent (i.e. social protection is at seven percent, education at four percent, and health at one percent).

On 23rd October 2020, after consulting with all the relevant stakeholders at the provincial and federal levels, the Economic Affairs Division issued concurrence to the ADB on COBP 2021–2023.

An official statement released by the ministry stated that the minister said that the proposed CPS Framework was in line with the present government’s priorities.

He said that the CPS’s greater focus on improving economic management, building resilience and boosting competitiveness and private sector development would allow Pakistan to unleash the growth potential of public-private partnership sector, and help a faster post-COVID-19 recovery.

The minister, while appreciating the ADB’s continuous support to Pakistan, assured the VP that the government is committed to continue structural reforms in multiple areas of economy, governance and institutions including simplification of decision making for project approval and implementation and regular portfolio review of foreign-aided projects.

A national coordination committee has also been constituted to ensure timely implementation and completion of projects and smooth disbursement of loan and grant components.

The minister suggested new areas for the ADB’s assistance including support for Public-Private Partnership; strengthening food security infrastructure, supply chains, developing forecast mechanism for demand and supply and enhancing agro-productivity; and operationalisation of the EXIM Bank to effectively provide credit, guarantee and insurance products to boost the country’s trade volume.

The vice president and the minister agreed to continue discussing ways to deepen the ADB and Pakistan’s development partnership and ensure the effectiveness of the ongoing portfolio.



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