Asian Development Bank (ADB) President Masatsugu Asakawa on Tuesday said the bank will maintain its support for Pakistan in the ongoing year, focusing on critical economic and structural reforms through a policy based lending programme.

The pledge was announced by the top ADB official during a news conference held at the start of the 56th annual meeting of the ADB in Incheon, South Korea.

Asakawa acknowledged the government’s efforts to stabilise the economy by pursuing the IMF’s Extended Fund Facility (EFF) and implementing measures such as containing expenditure, increasing domestic revenue mobilization, introducing energy sector reforms, including renewable energy, promoting public-private partnerships, and enhancing financial sustainability.

He stated that the ADB was providing as much support as possible to Pakistan, and expressed hope that the government’s measures will help improve the country’s economic situation.

The bank has so far committed $39.7 billion to Pakistan through 740 public sector loans, grants, and technical assistance programmes, he added.

According to him, the cumulative loan and grant disbursements to Pakistan amounted to $30.76bn. “These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds.”

“ADB’s ongoing sovereign portfolio in Pakistan includes 53 loans and 3 grants worth $9.59bn. In 2022, ADB’s loan and grant disbursements to the country amounted to $2.49bn. This includes $1.8bn in programme lending, $680 million from project lending, and $4.6m from grants. ADB provided $1.5bn to help Pakistan boost social protection, promote food security, and support employment for people.”

Initiative to battle climate change

The ADB president also announced a funding guarantee facility to help the region reduce greenhouse gas emissions and build infrastructure resilient to the impact of climate change.

Named the Innovative Finance Facility for Climate in Asia and the Pacific (IF-CAP), the plan is the first leveraged guarantee mechanism for climate finance adopted by a multilateral development bank, the ADB said.

Explaining details of the landmark programme, Asakawa said: “The climate events we have experienced over the past 12 months will only increase in intensity and frequency, so we must take bold action now.”

IF-CAP will contribute to meeting the ADB’s goal to use $100 billion from its own resources to combat climate change for 2019-2030, the ADB chief said.

“ADB estimates that $1.7 trillion per year will need to be invested in infrastructure in developing Asia between 2016-2030 to meet both climate and development goals.”

Under the programme, Denmark, Japan, South Korea, Sweden, the United Kingdom and the United States will guarantee some of the lender’s loans and shoulder losses in case its borrowers default on their debt.

It will free up capital the ADB needs to hold for credit risk, and allow it to increase lending to climate-related projects in Asia.