On Tuesday, Finance Minister Ishaq Dar made the announcement that the State Bank of Pakistan (SBP) had received Rs500 million from the Asian Infrastructure Investment Bank (AIIB).
The minister stated on Twitter that “AIIB has transferred today, as per their board’s approval, to State Bank of Pakistan/Government of Pakistan $500 million as programme financing.” Earlier this month, the finance minister stated that Pakistan would receive the funds as co-financing for a development program.
Asian Infrastructure Investment Bank (AIIB) has transferred today, as per their Board’s approval, to State Bank of Pakistan/Government of Pakistan
US $ 500 million as program financing.
— Ishaq Dar (@MIshaqDar50) November 29, 2022
An Asian Development Bank (ADB) financing program designed to combat the social effects of an economic crisis is the Building Resilience with Active Countercyclical Expenditures Programme.
Pakistan and the ADB agreed to provide a $1.5 billion loan to support budgetary support and flood-related rehabilitation and reconstruction efforts last month.
The loan, which was provided by the BRACE Program, was used to pay for the government’s $2.3 billion countercyclical development expenditure program, which was created to cushion the effects of external shocks like the Russian invasion of Ukraine.
In the wake of devastating floods and disruptions to the global supply chain, the $1.5 billion loan was intended to support employment, promote food security, and provide social protection.
The ADB later paid the State Bank $1.5 billion “as disbursement of policy-based loan for the government of Pakistan,” as it later stated.
Early bond repayment
With Pakistan in the midst of an economic crisis and recovering from devastating floods that killed over 1,700 people, the AIIB’s today’s inflow of early bond repayment comes amid growing uncertainty about Pakistan’s ability to meet external financing obligations.
As of November 18, Pakistan’s central bank reserves were $7.8 billion, just enough to cover a month’s worth of imports.
SBP Governor Jameel Ahmad, on the other hand, predicted on Friday that inflows from international lenders would ensure that external financing requirements would be met on time.He stated that the nation would pay back an international bond for one billion dollars on December 2, three days before its due date.
Two of the analysts who were present said Ahmad told a briefing that the bond repayment, which will be paid off on December 5, will total $1.08 billion.
The governor stated that funding was secured from bilateral and multilateral sources for this purpose, including the $500 million from AIIB that Pakistan received today to ensure that the repayment would not affect its foreign exchange reserves.
