Pakistan receives $1.3b from Asian Development Bank

Under crisis response facility, ADB approves loan to support Pakistan pay off debt

KARACHI: Pakistan received $1.3 billion in loan from Manila-based Asian Development Bank (ADB), shoring up the country foreign currency reserves which had apparently shaken up following Islamabad made a notable foreign debt repayment last week.

"SBP has received $1.3 bn from Asian Development Bank (ADB)," State Bank of Pakistan (SBP) reported on Tuesday.

Earlier, Pakistan successfully made a foreign debt repayment of over $1 billion (including principal amount and interest money) against maturing a five-year Sukuk on December 2. The Islamic/Shariah-compliant bond was issued in December 2014 at a rate of return of 6.75% per year.

The central bank's next weekly update on the reserves position scheduled for Thursday (December 12) is going to record the outflow. The reserves may, however, exactly not reflect the amount of over $1 billion paid in Sukuk considering accounting-in other inflows and outflows during the week ended December 6.

Islamabad, ADB sign $1.3b deal for economic reforms

The central bank makes weekly updates on the reserves position with a leg one-week duration to make sure all transactions are properly accounted-in.

The country's foreign currency reserves hit eight-month high at $9.11 billion with a net inflow of $431 million recorded in the week ended November 29, 2019, according to the central bank latest update.

Earlier, ADB had approved the financing of $1.3 billion including $1 billion under its crisis response facility to support the country pay off debt and another $300 million for energy sector reforms.

The bank extended the crisis response facility for a period of seven years at an interest rate of London-Interbank Offered Rate plus 2%, which comes to around 4%.

The fund for the energy sector reforms was lent for a period of 20 years at an interest rate of 2%, it was learned.

ADB agreed to extend the financing following Pakistan entered the latest International Monetary Fund's (IMF) loan programme of $6 billion in May to improve its capacity to pay for imports and make foreign debt repayments.

IMF second tranche of $450 million is expected in late January or early February. It paid the first tranche of close to $1 billion in July.