Asian Development Bank approves $300m loan to support struggling financial sector

Published September 28, 2020
The Asian Development Bank has supported the development of Pakistan’s financial markets through three policy-based loans over the past two decades. — AFP/File
The Asian Development Bank has supported the development of Pakistan’s financial markets through three policy-based loans over the past two decades. — AFP/File

The Asian Development Bank (ADB) on Monday approved a $300 million loan to help strengthen Pakistan’s struggling finance sector.

The fresh loan, according to an official of the bank, will be used to support measures to develop competitive capital markets and encourage private sector investment in the country.

“The reforms proposed under this programme will lower the cost of financial intermediation and facilitate private sector investment to generate sustainable growth and job opportunities," said Sana Masood, a senior project officer at the bank.

"It will also mitigate the negative impact of capital market instability on the economy and help to diversify Pakistan’s financial system," Masood said in a statement.

Currently, Pakistan’s capital markets play a limited role in financial intermediation and resource mobilisation.

The Pakistan Stock Exchange, she added, lacks depth in terms of the number of investors and the number of companies raising capital.

Fewer than 250,000 individual investors, or less than 0.1 per cent of the population, she went on to say, have a stock investing account, and the PSX lags most of its regional peers on market capitalisation as a percentage of gross domestic product.

ADB has supported the development of Pakistan’s financial markets through three policy-based loans over the past two decades.

Islamabad and the bank have agreed to anchor the program to the design of a long-term national capital market master plan to build strong government ownership and coordination across the agencies.

The bank will also provide an $800,000 technical assistance to support the implementation of key reform actions under the programme.

In June, the ADB, and the World Bank each lent $500m to cash-strapped Pakistan to prop up its struggling economy that has taken a hit from global coronavirus restrictions.

On May 19, the ADB approved a separate $300m emergency assistance loan to strengthen Pakistan’s public health response to Covid-19 and help meet the basic needs of vulnerable and poor segments of the society.

Established in 1966, the Manila-based lending agency is owned by 68 members — 49 from the region.

Follow Dawn Business on Twitter, LinkedIn, Instagram and Facebook for insights on business, finance and tech from Pakistan and across the world.

Opinion

Editorial

Afghan turbulence
Updated 19 Mar, 2024

Afghan turbulence

RELATIONS between the newly formed government and Afghanistan’s de facto Taliban rulers have begun on an...
In disarray
19 Mar, 2024

In disarray

IT is clear that there is some bad blood within the PTI’s ranks. Ever since the PTI lost a key battle over ...
Festering wound
19 Mar, 2024

Festering wound

PROTESTS unfolded once more in Gwadar, this time against the alleged enforced disappearances of two young men, who...
Defining extremism
Updated 18 Mar, 2024

Defining extremism

Redefining extremism may well be the first step to clamping down on advocacy for Palestine.
Climate in focus
18 Mar, 2024

Climate in focus

IN a welcome order by the Supreme Court, the new government has been tasked with providing a report on actions taken...
Growing rabies concern
18 Mar, 2024

Growing rabies concern

DOG-BITE is an old problem in Pakistan. Amid a surfeit of public health challenges, rabies now seems poised to ...