In a latest business news coming from Islamabad, Asian Development Bank (ADB) and Pakistan signed a loan agreement of $1.3 billion on Monday. The loan aims to inject more capital into Pakistan’s forex reserves in a bid to support the weakening economy of Pakistan.
The news of the agreement was confirmed on a Twitter account of Federal Minister for Economic Affairs Hammad Azhar on Monday.
“Economic Affairs Division and ADB have signed policy based loans of USD 1.3 Bn today. The sums will be disbursed today and will help bolster reserves and strengthen our economic outlook.” Hammad Azhar tweeted.
Pakistan’s economic crisis
Earlier, the government announced that Pakistan’s Foreign exchange reserves are now at stable level. Pakistan is going through economic challenges and already is under the IMF program. The country is out of the bad economic cycle which hit Pakistan in 2018.
The constant rupee devaluation and tight monitory policy is part of the government’s plan to actualize the overall outlook of the economy. Both indicators hurting Pakistan’s growth rate which falls to 2.5%, but government claims that it will rise once the economy stabilizes, while the FDI would also increase. The exchange rate is now balanced with the actual economic condition.
Out of the total $1.3 billion loan, $300 million will be spent on energy sector and financial stability programs. This will contribute to the monitory policy issues and address the energy sector.
“The policy-based loan will not only strengthen exchange reserves but will also provide fiscal space to the government for implementing its reforms agenda”. Hammad Azhar said on the occasion.
The current level of reserves
The forex reserves are now almost touching $16b with the second installment of Saudi Aid. The inflows combining with reserves now pilled up to USD 15.99b by the end of November 29. They include Foreign reserves of $9.11 billion held by the State Bank and $6.88 billion held by commercial banks
Apparently, with the newly signed agreement with the Asian Development Bank (ADB) , the reserves are once again set to rise. This will further give boost to the ailing – now stabilized to extend – Pakistani economy.