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ISLAMABAD: The Asian Development Bank (ADB) will provide a $300 million loan to help promote macroeconomic stability in Pakistan to enhance trade competitiveness and facilitate export diversification.
An agreement of Trade and Competitiveness Programme was signed in Islamabad on Friday. Minister for Economic Affairs Makhdum Khusro Bakhtyar witnessed the signing ceremony.
Speaking on the occasion, Country Director ADB Ms. Xiaohong Yang said the bank is providing its support for policy reforms and project financing in the sectors of financial management, energy, road, social sector, water and irrigation and urban services.
“While COVID-19 hit Pakistan at a critical point in its macroeconomic recovery, the government’s ongoing efforts to ensure stability have started showing encouraging results this fiscal year,” said ADB Principal Public Management Specialist Hiranya Mukhopadhyay in a statement. “ADB’s program will support these efforts and help Pakistan to improve its export competitiveness—now more important than ever given the impacts of the pandemic.”
ADB’s program will help Pakistan recover its current account deficit in a sustained manner and continue to facilitate export diversification. It will introduce tariff- and tax-related policy reforms to help improve Pakistan’s international competitiveness and further strengthen key institutions, including accreditation bodies, Export–Import Bank (EXIM) of Pakistan and the Pakistan Single Window.
The new financing falls under the Trade and Competitiveness Program. During the first phase, ADB helped usher in key reforms, including reducing or abolishing tariffs and ad hoc duties on a large number of raw materials and intermediate goods. Several steps were also taken to introduce e-commerce, strengthen key institutions involved in facilitating trade, and enhance the export certification process.
Since 2004, Pakistan has registered a rise-and-fall pattern of export growth reflecting underperformance in its export industry and long-term decline in export competitiveness. This is compounded by lost export growth momentum from COVID-19, which has reduced high-income countries’ demand for manufacturing goods and disrupted the supply of raw materials.
The ADB said it is coordinating efforts while the program complements International Monetary Fund-led reform initiatives by helping to improve competitiveness which will help build robust foreign exchange reserves.
