Manila, Philippines (BBN) - The Asian Development Bank (ADB) has approved a $500 million loan to support Pakistan’s efforts to address harm done to poor families and the country’s economy by unprecedented international food and fuel price hikes.
The ADB loan will support ongoing changes in the energy and agriculture sectors, and will help lay the foundation for a radical transformation of the economy by diversifying, deepening and expanding a competitive industrial sector, and creating much-needed jobs for Pakistan’s young and growing labor force, an ADB press statement said on Tuesday.
The support comprises a key part of a global financing plan underpinning the government’s economic stabilization program. The stabilization plan includes actions to shore up and manage foreign reserves, improve monetary policy, trim the fiscal deficit and its financing gap, and cut back on government borrowing from the State Bank of Pakistan, the country’s central bank.
The stabilization plan is focused on protecting the poor through special safety net programs, and reassuring financial markets through fiscal and monetary discipline, according to the statement.
The stabilization plan was formulated by the government, with technical advice from other parties, the statement added.
The State Bank of Pakistan, working closely with the government, has undertaken a series of actions to improve risk management in the sector, strengthen payment systems and protect consumers. This will create stability at a time when international markets are in turmoil.
The ADB is a major financing partner of Pakistan. Its strategy focuses on three areas: infrastructure (roads, irrigation and logistics), utilities (power, energy, urban services) and reforms (including social service provision and finance, public financial resource management, financial sector intermediation and capital markets development).
BBN/SI/SS/AD-30September08-8:44 PM (BST)