The Asian Development Bank (ADB) is planning to provide around $10 billion in fresh assistance for policy-based programs and for various development projects to Pakistan, media reports as well as ADB informed on Thursday.
The financial assistance is likely to be given over the next five years under ADB’s new Country Partnership Strategy (CPS).
According to documents available with the media, the CPS has been designed to tackle the economic and social challenges thrown up by the pandemic and includes addressing the country’s persistent structural challenges.
The ADB’s assistance –spread over the next five years –will emphasize on supporting three interlinked pillars i.e. (i) improving economic management; (ii) building resilience; and (iii) boosting competitiveness, and private sector development.
Moreover, the final allocation at the end of the CPS 5-year period will depend on project readiness, the outcome of country assessments and available resources.
The details of the same were discussed by Pakistan’s Federal Minister for Economic Affairs Makhdoom Khusro Bakhtyar, who held a virtual meeting with Shixin Chen, vice president of the ADB, accoring to MLN/MettisGlobal News.
A Federation Run on Debt!
The South Asian country’s debt has reached the level where the bulk of its budget is dedicated to debt servicing. Over the decades, observers say, it fell prey to the temptation of spending lavishly on non-developmental projects –and now there’s disproportionate expenditure bills to pay.
Such spending did not add anything to the economy but kept ballooning its external debts. Meanwhile, war on terror cost Pakistan between $120 to $130 billion in economic losses.
The foreign debt stands at $113 billion as of June 30, 2020. The country has to make total external debt repayments to the tune of $10.3 billion during this year. The total external debt repayment of $10.3 billion constitutes $8.5 billion as principle payment of loans and $1.8 billion as interest repayment.
That the ADB loan over 5 years includes addressing the country’s persistent structural challenges, improving economic management and building resilience is the need of the hour, other things being equal, experts say.
The increase in debt stock and debt servicing continue to pose a major challenge to the State’s exchequer and a threat to the country’s national security.
“A-Dollar-Saved-is-a-Dollar-Earned” mantra being used to handle the country’s financial management has helped and is helping, says a New York-based Pakistani-American analyst. However, “the need to create sustainable (predictable) revenue streams is amiss”.”It is critical for debt management and for economic growth”. “These are two sides of the coin,” he adds.