Pakistan receives $500m from Asian Infrastructure Investment Bank

Published November 29, 2022
In this file photo, Finance Minister Ishaq Dar addresses a press conference in Islamabad. — DawnNewsTV
In this file photo, Finance Minister Ishaq Dar addresses a press conference in Islamabad. — DawnNewsTV

Finance Minister Ishaq Dar announced on Tuesday that the Asian Infrastructure Investment Bank (AIIB) had transferred $500 million to the State Bank of Pakistan (SBP).

“AIIB has transferred today, as per their board’s approval, to State Bank of Pakistan/Government of Pakistan $500 million as programme financing,” the minister said on Twitter

Earlier this month, the finance minister had said Pakistan would receive the funds as co-financing for a development programme.

The Building Resilience with Active Countercyclical Expenditures Programme is an Asian Development Bank (ADB) financing programme to counter the social fallouts of economic crisis.

Last month, the ADB signed an agreement with Pakistan to provide a $1.5 billion loan for budgetary support and help flood-related rehabilitation and reconstruction activities.

The loan, provided under the BRACE Programme, was provided to fund the government’s $2.3bn countercyclical development expenditure programme designed to cushion the impacts of external shocks, including the Russian invasion of Ukraine.

The $1.5bn loan was aimed to provide social protection, promote food security, and support employment for people amid devastating floods and global supply chain disruptions.

The State Bank later announced that it had received $1.5bn from the ADB “as disbursement of policy-based loan for the government of Pakistan”.

Early bond repayment

Today’s inflow from AIIB comes amid growing uncertainty about Pakistan’s ability to meet external financing obligations with the country in the midst of an economic crisis and recovering from devastating floods that killed over 1,700 people.

Pakistan’s reserves with the central bank stood at $7.8bn as of November 18, barely enough to cover a month’s imports.

But on Friday, SBP Governor Jameel Ahmad said he expected external financing requirements would be met on time because of inflows from international lenders. He said the country will repay a $1 billion international bond on December 2, three days before its due date.

The bond repayment, which matures on Dec 5, totals $1.08bn, Ahmad told a briefing, according to two analysts who were present.

For this purpose, the governor said funding was lined up from multilateral and bilateral sources, one of which was the $500m from AIIB which Pakistan received today, to ensure the repayment would not affect foreign exchange reserves.

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

Opinion

Editorial

Unyielding onslaught
12 Jun, 2024

Unyielding onslaught

SEVEN soldiers paid the ultimate price in Lakki Marwat on Sunday when their vehicle was blown up in an IED attack,...
X diplomacy
Updated 12 Jun, 2024

X diplomacy

Both states can pursue adversarial policies, or come to the negotiating table and frankly discuss all outstanding issues, which can be tackled through dialogue.
Strange decisions
12 Jun, 2024

Strange decisions

THE ECP continues to wade deeper and deeper into controversy. Through its most recent decision, it had granted major...
Interest rate cut
Updated 11 Jun, 2024

Interest rate cut

The decision underscores SBP’s confidence that economic stability is gaining traction.
Rampant zealotry
11 Jun, 2024

Rampant zealotry

Decades of myopic policies pursued by the state have further aided the radicalisation of significant portions of the population.
Cricket breakdown
11 Jun, 2024

Cricket breakdown

THERE was a feeling that Pakistan had finally turned the corner in their T20 World Cup campaign. Sadly, it was only ...