ISLAMABAD - The Asian Development Bank (ADB) on Wednesday has approved a $500 million policy-based loan to support the Government of Pakistan’s reforms to improve trade competitiveness and exports as a defence against external shocks and to help finance the country’s trade deficit.

The ADB also approved $750,000 technical assistance package to support the preparation and implementation of the program. Trade and Competitiveness Program will help Pakistan to promote macroeconomic stability, improve export performance, and boost economic growth by facilitating improved trade competitiveness. Under this programme, the government has introduced important tariff and tax related policy reforms to support Pakistan’s export sector and improve its competitiveness internationally and strengthen key institutions involved in facilitating trade, including accreditation bodies Export-Import Bank of Pakistan (EXIMBP) and the National Single Window (NSW). The loan agreement was signed by Secretary, Economic Affairs Division Mr. Noor Ahmed and Country Director Asian Development Bank (ADB) Ms. Xiaohong Yang. Federal Minister for Economic Affairs Hammad Azhar witnessed the loan signing of Trade & Competitiveness Program (Subprogram – 1).

Azhar thanked ADB and its President for their support and reposing confidence in the present government’s reform agenda. He further said that ADB Board approved release of $500 million to support the present government’s reform agenda for improving trade competitiveness to enhance exports. Proceeds of this facility will boost foreign exchange reserve built up and give much needed budgetary support to Government of Pakistan.

Bank committed to providing support to strengthen Pakistan’s economy

He said more significantly, budgetary support program from a long term development partner i.e ADB has been restored after a gap of more than 2 years.  He acknowledged ADB’s support for Pakistan. He highlighted that Pakistan’s exports are concentrated in less sophisticated and lower value-added products and lack diversification and innovations. The Minister expressed that ADB’s policy-based lending will not only strengthen the foreign exchange reserves but will also provide fiscal space to the government and boost economic activities in the country.

The Minister reiterated that the government is fully committed to improve governance, bring economic reforms and achieve sustainable development. The government aims to put Pakistan’s economy on the path of sustainable and balanced growth and increase per capita income. He emphasised that ADB should further scale up its assistance to Pakistan both for programme lending and project financing.

It is worth mentioning here that ADB had policy loan for Pakistan after approval of IMF programme. The ADB plans to provide about $2.1 billion out of $3.4 billion funds to support Pakistan’s reform and development programmes during fiscal year 2019-20.

Country Director Xiaohong Yang, stated that ADB is one of the leading development partners of Pakistan. ADB fully supports the government’s development vision and policies. She expressed that ADB is providing its support for policy reforms and project financing in the key priority areas such as energy, road, social sector, water & irrigation and urban services. She also reiterated ADB’s strong commitment to further strengthening and expanding its partnership with Pakistan.

“ADB has a 53-year history of strong partnership with Pakistan and we are pleased to be in a position to provide this important support for the country’s economic reform program,” said ADB Vice-President Mr. Shixin Chen. “The Trade and Competitiveness Program focuses on addressing structural issues obstructing Pakistan’s export competitiveness through reforms in the areas of tax and tariff rationalisation, as well as institutional strengthening. Moving forward, ADB is committed to provide wide-ranging support to strengthen Pakistan’s economy and reduce the risk of external economic shocks.”

Supported by the International Monetary Fund, ADB, and other development partners, the government has now committed to a range of structural reforms to the country’s trade environment to improve its export performance, reduce the current account deficit, and drive economic growth.

 “Trade is an important pillar in Pakistan’s overarching development objective to foster economic stability and sustainable high growth,” said ADB Director General for Central and West Asia Werner Liepach.