AfDB report calls for fiscal consolidation and policy reforms – Business & Finance
ISLAMABAD: Continued fiscal consolidation and policy reform efforts will be essential to support improvements in macroeconomic stability, particularly in the areas of broadening the tax base and improving the business environment , according to the Asian Development Bank (ADB).
The bank in its report, “Asian Development Bank member fact-sheet”, said that the Covid-19 pandemic continues to pose major health and economic challenges in Pakistan. Reforms are needed to promote high value-added exports, increase social spending, strengthen the financial and technical sustainability of the energy sector and implement structural changes that will strengthen institutions and create jobs, he said. he adds.
The report notes that the total outstanding balances and undisbursed commitments of AfDB non-sovereign transactions in Pakistan as of December 31, 2021 was $441.31 million, or 3.14% of the AfDB’s total private sector portfolio. .
To date, the AfDB has committed 723 public sector loans, grants and technical assistance totaling $37 billion in Pakistan. Cumulative loan and grant disbursements to Pakistan amount to $28.27 billion. These were financed through ordinary and concessional ordinary capital resources, the Asian Development Fund and other special funds.
AfDB’s ongoing sovereign portfolio in Pakistan comprises 48 loans and 3 grants worth $8.42 billion. In 2021, AfDB loan and grant disbursements in Pakistan amounted to $1.31 billion, including $0.3 billion in program loans and $1.01 billion in project loans and 3 million dollars in donations.
AfDB’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 – including $3 million from ADF – for an integrated social protection program to bolster Pakistan’s flagship Ehsaas program. The loan is complemented by a $24 million grant from the Education Above All Foundation, he added.
The program builds on a previous loan of $500 million under the AfDB’s Covid-19 Expenditure and Active Response Support Program and a $300 million emergency assistance loan for strengthen Pakistan’s public health response to protect the poorest families from the pandemic. The AfDB has committed $300 million for the construction of the Balakot hydropower plant on the Kunhar River near the town of Balakot in Khyber-Pakhtunkhwa. By 2027, the plant will add 1,143 gigawatt hours of clean energy per year to the country’s energy mix, improving the reliability and sustainability of the energy sector. Another $300 million policy-based loan has been committed to support reforms aimed at strengthening Pakistan’s energy sector and improving its financial sustainability. The program will help to reduce and manage the cash deficit accumulated throughout the electricity supply chain, known as circular debt.
Cumulative co-financing commitments in Pakistan show that in sovereign co-financing, $4.63 billion has been committed to 53 investment projects and $105.87 million to 64 technical assistance projects since 1973. In non-sovereign co-financing , $11.72 billion has been allocated to 21 investment projects since 1993.
In 2021, Pakistan received a total of $450 million in loan co-financing from the Asian Infrastructure Investment Bank for two investment projects, and $24.48 million in grant co-financing from the Education Foundation. Above All for the Integrated Social Protection Development Program.
Copyright Business Recorder, 2022