Ishaq Dar, Pakistan’s finance minister, revealed on Tuesday that the State Bank of Pakistan (SBP) has received a payment of $500 million from the Asian Infrastructure Investment Bank (AIIB).
“AIIB has transferred today, as per their board’s approval, to State Bank of Pakistan/Government of Pakistan $500 million as programme financing,” the minister said on Twitter. Earlier this month, the finance minister stated that Pakistan will get the money as co-financing for a development initiative.
To combat the social effects of the economic crisis, the Asian Development Bank (ADB) has funded the Building Resilience through Active Countercyclical Expenditures Programme. An agreement between the ADB and Pakistan was inked last month to offer a $1.5 billion loan for budgetary support as well as assistance with flood-related repair and reconstruction efforts.
The government’s $2.3 billion countercyclical development spending programme, created to lessen the effects of external shocks like the Russian invasion of Ukraine, was funded in part by a loan issued under the BRACE Program.
The $1.5 billion loan was intended to boost employment for individuals in the midst of disastrous floods and interruptions to the global supply chain while also promoting food security and social protection.
In a subsequent statement, the State Bank stated that it had received $1.5 billion from the ADB as distribution of policy-based credit for the government of Pakistan.
Early bond repayment
The AIIB’s inflow today comes as there is rising concern about Pakistan’s capacity to satisfy its requirements for external finance, given that it is going through an economic crisis and is still recuperating from severe floods that claimed more than 1,700 lives. As of November 18, Pakistan’s reserves at the central bank were just $7.8 billion, which is not enough to pay one month’s worth of imports.
However, SBP Governor Jameel Ahmad stated on Friday that he anticipated external finance needs to be satisfied on schedule due to inflows from foreign lenders. He said that on December 2, three days ahead of schedule, the government will pay back a $1 billion foreign bond.