ADB approves $500m loan to buy vaccines

Both sides sign agreement on highly concessional rates with 25-year repayment period

ISLAMABAD:

The Asian Development Bank on Friday approved a $500 million loan to procure coronavirus vaccines, as the government has finally decided to disclose the Chinese vaccine price to the international lenders to secure more loans.

The Manila-based lender approved the loan to support Pakistan’s National Deployment and Vaccination Plan by purchasing and delivering an estimated 39.8 million doses of Covid-19 vaccine, safety boxes and syringes, according to an ADB handout.

Both the sides also signed the loan agreement on the same day in Islamabad. Minister for Economic Affairs Omar Ayub Khan witnessed the signing ceremony of the financing agreement.

The government can claim $150 million of the loan money on account of previous purchases and the rest of the loan will be available for future procurements. This will partially help the government to take pressure off from the rupee due to nearly $100 million monthly payments from the government resources on account of vaccine cost.

Read: Pakistan closer to securing WB loan

Under this financing facility, the ADB will provide $500 million for procurement of Covid-19 vaccine on highly concessional rates with 25 years’ repayment period including five-year grace period, according to the Ministry of Economic Affairs.

“Vaccines help to reduce the spread and mortality of Covid-19, restore confidence among citizens, and are vital to the economic recovery,” ADB President Masatsugu Asakawa said. This project will help to protect vulnerable groups in Pakistan and is an integral part of the development partner package helping the government to mitigate the health, social and economic impacts of the pandemic, he added.

The government is aiming to vaccinate the entire eligible population, around 119 million people comprising all those aged 18 and over, prioritising frontline healthcare workers, the elderly, marginalised groups including refugees and internally displaced persons, and people with comorbidities.

The ADB’s Covid-19 Vaccine Support Project will provide financing to vaccinate over 18 million people from priority groups, or about 15% of the eligible population.

The ADB’s assistance will also help strengthen the capacity of the Ministry of National Health Services, Regulations and Coordination, and the Federal Expanded Programme on Immunisation to effectively implement the Covid-19 vaccination programme.

Both institutions will receive support in project management and coordination, procurement and supply chain management, gender mainstreaming, monitoring and evaluation, performance and information systems audits and waste management.

The sources said that the government has also shown flexibility in its earlier decision of not disclosing the price of the vaccines for securing nearly $2 billion loans for procurements. The National Disaster Management Authority had long been resisting the move and instead sought funds from the budget.

However, the finance ministry was of the view that the government should avail relatively cheaper foreign loans that will also avert pressure on the rupee due to payments from the SBP foreign exchange reserves.

The NDMA was of the view that the disclosure of price to the World Bank and the ADB would result in cancellation of deals with the suppliers. However, the sources said that the Chinese vaccine manufacturers of Sinopharm and Sinovac have already given permission for limited disclosure to the lenders in their deals with The Philippines and Bangladesh.

As of July 1, 2021, the World Bank approved operations to support vaccine rollout in 53 countries amounting to $4.4 billion, a WB spokesperson said when contacted whether the Chinese manufacturers had disclosed their prices.

The WB spokesperson said, “Vaccination contracts often contain confidential commercial information which belongs to the contracting parties and not to the bank and it is up to the borrowers to disclose full contracts with the consent of the contracting parties.”

Read more: Single-day vaccine shots top 1m

The sources said that in other countries, the lenders and the borrowers have signed the Non-Disclosure Agreement to keep the price protected. Pakistan would also sign the NDAs with the WB and the ADB to get loans, the sources said.

The finance ministry has already provided nearly $450 million for vaccine procurements for the months of June and July from the budget.

In the last fiscal year, the Ministry of Finance had given Rs25.3 billion to the NDMA for vaccine procurement but the actual spending remained at Rs16.6 billion. The health ministry had moved a summary for the approval of the cabinet for another $393 million or Rs63.5 billion supplementary budget to procure vaccines for the months of August and September.

Meanwhile, Omar Ayub Khan appreciated the ADB for extending timely support to Pakistan at this difficult time when the country is facing increasing health-related and socioeconomic challenges amid Covid-19 pandemic.

The minister reiterated that the government was committed to ensure timely procurement of vaccines with an uninterrupted supply chain to meet the target of inoculating people. He expressed Pakistan's efforts to curtail the Covid-19 pandemic through the smart lockdown approach.