ISLAMABAD, Aug 16: The Asian Development Bank and the Islamic Development Bank on Saturday agreed to offer $500 million each as emergency support within two weeks to help improve Pakistan’s foreign exchange reserves which have dropped to about $9 billion against $16 billion in October 2007.

“Both the ADB and IDB have assured us to shore up our reserves by extending $1 billion emergency assistance before the end of this month,” a senior official of the ministry of finance told Dawn on Saturday.

He said the IDB would be providing trade financing worth $500 million, adding that the World Bank would also be offering “upfront” funds out of its $1 billion annual assistance.

The ministry of finance, he said, had also prepared a plan to seek more local and foreign assistance to deal with financial difficulties.

On the internal front, the official said, short-term measures had been taken to arrange emergency funding from various sources.

In the first place, he said, the government had decided to restrict borrowing from the central bank by ensuring “quarterly net zero borrowing” which meant that after every three months government would get its borrowing from the State Bank adjusted so that it did not increase.

The central bank, he said, would introduce two new products, aimed at helping the government to manage short-term new funding line which would not be inflationary.

He said that a decision had been taken to seek non-bank borrowing and the government would obtain Rs150 billion from national savings to improve its weak kitty position during 2008-09.

The objective is to achieve 4.7 fiscal deficit target during the current financial year.

“Then a programme has been finalised to launch government commercial papers, including Pakistan Investment Bond (PIB) and a new Sukuk to secure Rs25 billion on a short-term basis,” the official said.

These papers, he said, would have the bench marking with the treasury bills. He said that new papers, PIB and Sukuk would be offered to public sector corporations and banks to manage required funding.