ISLAMABAD: The Asian Development Bank (ADB) would provide a loan of $3.4 billion to Pakistan for budgetary support, said federal Minister for Planning, Development and Reforms Khusro Bakhtiar as well as Adviser to the Prime Minister on Finance Dr Abdul Hafeez Shaikh on Saturday.

The news was broken by Mr Bakhtiar who told a press conference that an agreement had been reached between the ADB and the finance ministry in this regard. Of the total amount, $2.1bn would be released within a year of the agreement.

When asked to explain the terms of the loan, the minister only said it was “on a concessional rate”.

Later in the day, Dr Shaikh took to Twitter to confirm the development. “The ADB will provide $3.4 billion in budgetary support,” he said in his tweet. “$2.2 billion will be released this fiscal year (FY), starting in the first quarter of FY 2019-20. This will help the reserve position and the external account.”

Minister says borrowing facility comes ‘on a concessional rate’

Reuters news agency quoted the finance ministry as saying that the first disbursement “is to cover such policy reform areas as trade competitiveness, energy sector and capital markets development”.

A press release issued by the ministry said ADB’s director general Werner Leipach and its country director Xiaohong Yang called on Dr Shaikh and discussed with him matters relating to ADB’s upcoming operations in Pakistan.

“The [ADB’s] director general briefed the adviser that in addition to strong project portfolio, the bank is also keen to provide balance of payments financing to support government of Pakistan’s structural reform agenda,” added the press release.

The government seeks help to overcome a ballooning balance of payments crisis. Last month, it reached an accord in principle with the International Monetary Fund (IMF) for a three-year, $6bn bailout package aimed at shoring up its finances and strengthening a slowing economy.

The ADB financing would come on top of the IMF loan.

At his press conference, Mr Bakhtiar also said that Emir of Qatar Sheikh Tamim bin Hamad Al-Thani would be visiting Pakistan shortly and that during his visit cooperation between the two countries would “reach new heights”.

In response to a question, he said Pakis­tan’s relations with Qatar were not dependent on its ties with other countries. “Pakis­tan follows an independent foreign policy.”

Outlining what he called salient features of the government’s development strategy, the minister said about 80 per cent of the total amount allocated for the annual development plan would be spent on completing 295 ongoing projects. Failure to complete a project in time leads to an increase in its cost.

He said the government had dropped the 233 “unapproved projects” that had been included in the annual development plan by the previous government during its last days in power.

Mr Bakhtiar, however, conceded that many unapproved projects were still part of the development plan. In this regard, he said, the departments had been given a deadline of June 30 to get their projects approved.

He said that despite challenges, Rs951bn had been earmarked in the budget for the public sector development programme. Of this amount, Rs250bn would be spent for projects under public-private partnership. Out of the remaining Rs700bn, allocations would be made for the areas which had been neglected for long, he said.

Published in Dawn, June 16th, 2019