Value-Added Exports, Energy Reforms & Increased Social Spending to Strengthen Pakistan: ADB

Asian Development Bank (ADB) has stated that reforms are required to promote high value-added exports, expand social spending, reinforce energy sector financial and technical sustainability, and implement structural changes that will strengthen institutions and create jobs.

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

To date, ADB has committed 723 public sector loans, grants, and technical assistance totaling $37 billion to Pakistan. Cumulative loan and grant disbursements to Pakistan amount to $28.27 billion. These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds.

ADB’s ongoing sovereign portfolio in Pakistan includes 48 loans and 3 grants worth $8.42 billion. In 2021, ADB’s loan and grant disbursements to Pakistan amounted to $1.31 billion, comprising $0.3 billion in program lending and $1.01 billion from project lending, and $3 million from grants.

The report noted that continued efforts toward fiscal consolidation and policy reforms would be key to sustaining improvements in macroeconomic stability, especially in broadening the tax base and improving the business environment.

The Bank stated that the COVID-19 pandemic continues to pose major health and economic challenges to Pakistan. Reforms are required to promote high value-added exports, expand social spending, reinforce energy sector financial and technical sustainability, and implement structural changes that will strengthen institutions and create jobs, it added.

ADB’s support to Pakistan’s coronavirus disease (COVID-19) pandemic response in 2021 included a $500 million loan in August to help procure 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 strengthen Pakistan’s flagship Ehsaas program. The loan is complemented by a $24 million grant from the Education Above All Foundation, it added.

The program builds on an earlier $500 million loan under ADB’s COVID-19 Active Response and Expenditure Support Program and a $300 million emergency assistance loan to strengthen Pakistan’s public health response to shield the poorest families from the pandemic. ADB committed $300 million for the construction of the Balakot hydropower plant on the Kunhar river near Balakot City in Khyber Pakhtunkhwa.

By 2027, the plant will add 1,143-gigawatt hours of clean energy annually to the country’s energy mix, enhancing the energy sector’s reliability and sustainability. Another $300 million policy-based loan was committed to supporting reforms to strengthen Pakistan’s energy sector and improve its financial sustainability. The program will help reduce and manage the accumulated cash shortfall across the power supply chain known as circular debt.

ADB’s cumulative co-financing commitments in Pakistan are as follows:

Sovereign cofinancing: $4.63 billion for 53 investment projects and $105.87 million for 64 technical assistance projects since 1973.
Non-sovereign cofinancing: $11.72 billion for 21 investment projects since 1993.

In 2021, Pakistan received a total of $450 million loan co-financing from the Asian Infrastructure Investment Bank for two investment projects and a $24.48 million grant co-financing from the Education Above All Foundation for the Integrated Social Protection Development Program.

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