Pakistan receives $505m from World Bank

Pakistan has received around $500 million in soft loan from the World Bank, helping the rupee to maintain its uptrend for the sixth successive working day on Tuesday.

The global lender has provided the loan at a concessional rate to support Islamabad in bridging the shortfall in budgeted expenditures, mainly on healthcare and socio-economic fronts, to better fight the coronavirus pandemic.

“The SBP (State Bank of Pakistan) has received $505.5 million from the World Bank,” the central bank said on its official Twitter handle.

The inflow has apparently improved the SBP’s foreign currency reserves to over $12.5 billion or equivalent to over four months of import cover.

The loan helped the rupee to appreciate Rs0.42 at Rs166.45 to the US dollar in the inter-bank market on Tuesday. Cumulatively, the rupee has regained Rs1.86 in the past six working days compared to the all-time low of Rs168.30 hit on July 20, according to the central bank.

Pakistan is expected to receive another $250 million in loan from the Asian Infrastructure Investment Bank (AIIB) soon. Ministry of Economic Affairs Secretary Noor Ahmed signed the two loan agreements on behalf of the government of Pakistan last week. World Bank Country Director Patchamuthu Illangovan and AIIB Vice President Konstantin Limitovsriy inked the deals on behalf of their respective organisations.

The international financial institutions have extended the financing under the RISE (Resilient Institutions for Sustainable Economy) programme and development policy financing, according to a statement.

The objective of the loans is to enhance the policy and institutional framework to improve fiscal management as well as the regulatory framework in order to foster growth and competitiveness. The efforts aimed at strengthening fiscal management would support the ongoing stabilisation drive of the government, it said. The programme also includes actions that respond to the immediate Covid-19 pandemic needs and address medium-term reforms.

Earlier, Pakistan received $1.3 billion in commercial loan from a Chinese bank and another $1.5 billion from the Asian Development Bank (ADB), World Bank and AIIB in June. The International Monetary Fund (IMF) also provided an emergency loan of $1.4 billion in April to fight Covid-19.

Published in The Express Tribune, July 29^th, 2020.

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