The Asian Development Bank has approved a $1 billion emergency loan for Pakistan. In a press release issued on Friday, the bank said it was an emergency loan to shore up the country’s finances and help strengthen its slowing economy.
The loan that the PTI government had asked the Philippine-based bank for in September was to build the country’s foreign exchange reserves.
“The quick dispersing special policy-based loan is part of a comprehensive multi-donor economic reform programme led by the IMF to stabilize Pakistan’s economy after a major deterioration in its fiscal and financial position in mid-2018 caused growth to slump and threatened progress in alleviating poverty,” read the statement.
For the first time in history, Pakistan has sought a crisis response facility to payback its foreign debts. The loan request was approved after an IMF review that painted a relatively positive picture of Pakistan’s economic matters and Moody’s credit rating outlook, which saw Pakistan stepping up to ‘stable’ from ‘negative’
In a weekly report posted on the State Bank of Pakistan website, it said that the country’s foreign exchange reserves had gone up by $1.8 billion in five months.
The reserves surged from $7.272 billion to $9.113 billion in the first five months of the 2020 financial year 2020, going up by $431 million just last week. This rise entailed a $1 billion repayment of the US Sukuk bonds loan Pakistan had acquired five years back, which the SBP confirmed was made entirely from the country’s reserves.
It remains to be seen whether this loan approval from the ADB, for desperate economic measures, was in fact desperately needed or acquired in a panic.