Asian ‘bridge’: ADB offers financial relief to Pakistan

The bank is expected to release loans against projects to match with the IMF payment schedules.

ISLAMABAD:

The Asian Development Bank (ADB) has offered to help Pakistan bridge the gap between the fresh International Monetary Fund (IMF) loans and upcoming repayments.

The ADB West and Central Asia Department Director General Klaus Gerhacusser made this offer during a meeting with Finance Minister Ishaq Dar here on Thursday, according to the finance ministry officials.

However, the offer will be subject to approval by the IMF’s Executive Board of Pakistan’s request for $5.3 billion to $7.3 billion loan, which is scheduled to meet in the first week of September in Washington.

Pakistan has sought the fresh loan to repay the previous loans.

However, the IMF wants to link the release of the tranches with prior implementation of the conditions agreed between both the parties.

The officials quoted the visiting director general as saying that the ADB would release loans against projects in a manner that would match with the IMF payment schedules. They added the ADB might prioritise $500 million to $600 million releases to help Pakistan meet its obligations towards the IMF.



Any such facilitation will ease pressure from the reserves held by the State Bank. These reserves are depleting at a faster pace in the absence of significant external loans.

Finance Minister Ishaq Dar told the ADB delegation that Pakistan had requested to the IMF for 500% of its quota or $7.3 billion. The IMF had shown its willingness to the extent of 425% of its quota so far, which was still higher than the staff level agreement of 348% of the quota or $5.3 billion.

Published in The Express Tribune, July 26^th, 2013.