ADB assures Pakistan of $2 billion in financial assistance annually

The Asian Development Bank (ADB) assured Pakistan of a $2 billion loan per annum on concessional terms at the request of Islamabad, sources said on Tuesday.

Amidst the worsened economic situation the Manila-based loan lenders’ assurance would help the country to deal with the crisis. The Bank is expected to provide $2 billion annually from 2024 to 2027.

According to the officials, the total four-year package amounts to $8 billion, out of every $2 billion ADB will take $1 billion at a 2 percent fixed rate under its concessional terms.

This month Pakistan signed many deals on unsustainable higher interest rates, ranging from 7 percent to the highest 11 percent. Additionally, the finance ministry signed a $600 million deal with a bank at the highest 11 percent interest rate.

The amount of the agreement will be owed in dollars, as the country was already taking tight measures to increase the reserves of the greenback.

Despite Pakistan having already reached at staff-level-agreement with the International Monetary Fund (IMF) and set to meet with the Executive Board of the lenders on September 25, the ADB did not compromise with interest rate due to Pakistan’s creditworthiness.

Three international credit agencies placed Pakistan on lower spots of investment grades which became a barrier to tapping foreign investment.

The Economic Affairs Ministry said ADB’s interest rate in concessional financing is cheaper than 5 percent of IMF’s Extended Fund Facility (EFF) last month.

The development came after President Masatsugu Asakawa also met with Economic Affairs Minister Ahad Cheema to discuss the country’s development priorities for macroeconomic reforms.