ADB lends $500 million loan to Pakistan

"The amount will also be sanctioned to provide defense for the country against external shocks."

(Web Desk) – The Asian Development Bank (ADB) has approved a loan of $500 million for Pakistan to support and improve its trade competitiveness and to boost its exports.

Sources familiar with the matter told the media on Wednesday, the amount will also be sanctioned to provide defense for the country against external shocks and to finance its trade deficit.

Earlier, Pakistan received the first tranche of $991.4 million from the International Monetary Fund (IMF).

IMF executive board formally had approved a 39-month-long extended fund facility (EFF) worth $6 billion for Islamabad on July 3.

Pakistan will get $2 billion annually, under the Extended Fund Facility (EFF), for the period of three years. The amount would help Pakistan stabilise its crippling state of economy and recover from fiscal debt and inflation.

Pakistan is facing a challenging economic environment, with lackluster growth, elevated inflation, high indebtedness and a weak external position," the result of a "legacy" of uneven policies, IMF mission chief Ernesto Ramirez Rigo had said in a statement.

Fitch Solutions, a US-based global research house, has revised down Pakistan’s economic growth to 2.7% for the next fiscal year 2019-20 from a previously quoted estimate of 4%.

In the report, experts opined that higher taxes will erode the purchasing power which in turn would slowdown consumption growth to 5.3% in FY20, down from 6.3% in FY18.

The consumption currently stands at around 82% of the GDP.

“Given our expectations for continued upside pressure on consumer prices over the coming months, we believe that the consumers’ purchasing power will continue to fall over the coming months, thereby weighing on consumption,” says Fitch.