Tuesday, Finance Minister Ishaq Dar said that the Asian Infrastructure Investment Bank (AIIB) has transferred Rs500 million to Pakistan’s State Bank (SBP).
“AIIB transferred $500 million to State Bank of Pakistan/Government of Pakistan as programme financing today, per board approval,” the minister tweeted.
The finance minister stated earlier this month that Pakistan would get the funds as co-financing for a development programme.
The Building Resilience with Active Countercyclical Expenditures Programme is a financing initiative of the Asian Development Bank (ADB) designed to mitigate the social repercussions of economic crisis.
The ADB inked an agreement with Pakistan last month to provide a $1.5 billion loan for budgetary support and to aid in the restoration and reconstruction of areas affected by flooding.
The BRACE Project loan was used to fund the government’s $2.3bn countercyclical development expenditure programme, which was aimed to buffer the effects of external shocks such as the Russian invasion of Ukraine.
The $1.5 billion loan was intended to provide social protection, increase food security, and boost employment for people affected by catastrophic flooding and disruptions to global supply chains.
The State Bank later stated that it had obtained $1.5 billion as a policy-based loan for the Pakistani government from the ADB.
Early bond repayment
In the midst of an economic crisis and in the aftermath of disastrous floods that killed more than 1,700 people, Pakistan’s capacity to pay its external funding obligations is viewed with increasing scepticism.
As of November 18, Pakistan’s central bank reserves amounted to $7.8 billion, hardly enough to fund one month’s imports.
However, SBP Governor Jameel Ahmad stated on Friday that he expects external finance needs to be met on time due to inflows from international lenders. He stated that the Philippines will repay a $1 billion international bond three days early, on December 2.
According to two analysts in attendance, Ahmad stated at a briefing that the bond repayment, due on December 5, totals $1.08bn.
The governor stated that funds had been secured from multilateral and bilateral sources, including the $500 million from AIIB that Pakistan received today, to ensure that the repayment would not impact foreign exchange reserves.
