Islamabad – The Asian Development Bank is considering to increase funding for Pakistan, praising the government for undertaking economic reforms that it said has earned confidence of foreign investors who were eager to invest in mega projects in the South Asian country.
ADB Executive Director Sami Saeed met Pakistani Finance Minister Ishaq Dar in Islamabad and discussed ADB’s development programs in Pakistan, according to a government statement issued on July 7.
The ADB on June 30 approved $225 million to help people affected by the recent floods, of which 65% will be for retroactive financing. The bank is expected to disburse another $400 million under the Energy Sector Reform Program, after the approval of the Board, Saeed told the Finance Minister.
The ADB is also planning to contribute towards “Disaster Management Fund” for Pakistan along with other donors, enhancing the country’s capacity to guard against natural calamities.
Dar appreciated the bank’s support, saying the ADB had been a great development partner for Pakistan, the South Asia’s second-biggest economy which grew by 4.24 percent in the fiscal year that ended June 30, helped by a set of reforms in line with an IMF program.
IMF last month released $506 million to Pakistan as part of $6.6 billion loan granted in 2013 to help the country stave off an imminent balance of payment crisis. It noted “encouraging” progress made by the government of Prime Minister Nawaz Sharif in stabilizing the fragile economy.
MSCI, an international investment research firm, also said last month it was adding Pakistan to its review list for a potential re-classification to Emerging Markets from Frontier Markets as part of the 2016 Annual Market Classification Review.
Emerging markets refer to countries which do not have economic strength of countries like the U.S. or Japan but are seen as being in the process of establishing a more mature marketplace. Frontier markets are categorized as the riskiest markets in the world to invest.
While structural reforms are making progress, the country’s chronic energy shortages which have hampered growth remains a key bottleneck. Pakistan has long suffered power and gas shortages that forces many factories to close. Frequent power outages of as long as 12 to 18 hours during summer, and gas shortages in winter have led to often violent protests in recent years.