ADB pledges $2 billion annual loans to Pakistan

The Asian Development Bank (ADB) has promised to provide Pakistan with $2 billion in new loans each year, with half of the amount offered at concessionary rates, as the country struggles to secure cheaper credit due to its deteriorating ratings.

During his visit to Pakistan, ADB President Masatsugu Asakawa assured the government of the lender’s continued support in areas such as public-private partnerships, climate and disaster resilience, domestic resource mobilization, women-inclusive finance, and energy sector reforms. The ADB will provide $1 billion at a fixed 2% rate under its concessional window, officials said.

The ADB’s concessional financing is cheaper than the International Monetary Fund’s lending, with an interest rate of around 5%. Pakistan has been facing difficulties in securing cheaper credit due to its worsened ratings, with the country forced to strike deals at unsustainable interest rates of up to 11%.

The ADB’s commitment to Pakistan is part of a four-year package worth $8 billion, with the Manila-based lender expected to provide $2 billion annually from 2024 to 2027.

The president also inaugurated the foundation of the ADB’s new resident mission building in Islamabad, recognizing the deep bond and long-standing development partnership between the two parties. During his visit, Asakawa met with Economic Affairs Minister Ahad Cheema and Prime Minister Shehbaz Sharif, discussing the country’s development priorities and macroeconomic reforms. The ADB president reaffirmed his commitment to supporting Pakistan’s reform agenda and praised the government’s efforts to implement tough stabilization measures.

The ADB’s focus on Pakistan’s climate resilience and sustainable development is expected to be a key area of focus in the coming years, with the lender exploring ways to mitigate the impacts of climate change, invest in social sectors, and develop climate-smart economic infrastructure.

Web Desk Karachi