ISLAMABAD-The Asian Infrastructure Investment Bank’s (AIIB) Board of Directors has approved a loan of $250 million to help Pakistan strengthen its response to the social and economic fallout from the COVID-19 pandemic.

Cofinanced with the World Bank, this development policy financing will help bolster the government’s Resilient Institutions for Sustainable Economy (RISE) Programme. The RISE Programme is proposed to be supported under the COVID-19 Crisis Recovery Facility of the Bank and co-financed with the World Bank (WB) as a Development Policy Financing (DPF) under the WB’s Policy on Development Policy Financing.

The objectives of the proposed Program are to (i) enhance the policy and institutional framework to improve fiscal management; and (ii) improve the regulatory framework to foster growth and competitiveness. These objectives will promote social protection and economic resilience to prevent long-term damage to the productive capacity, including human capital, of Pakistan’s economy. The Program constitutes one element of Pakistan’s response to and recovery from the impact of COVID 19 pandemic, focusing on economic revitalization and crucial health and social sector spending. While covering the government’s public health and emergency expenditures, the Programme also comprises policy and institutional actions to mitigate the adverse health and economic shocks. These policy actions will promote medium term reforms in macroeconomic management, institutional strengthening and foster growth and competitiveness for economic resilience.

The fiscal space provided under the Programme will deliver (i) social protection for the poor and vulnerable, (ii) an expanded health sector response to the pandemic, and (iii) a pro-poor fiscal stimulus package to ensure recovery in growth and employment. The Programme is, therefore, part of an integrated package of immediate efforts by the Government of Pakistan (GoP) to mitigate the significant negative health, social, and economic impacts of the COVID-19 pandemic.

The RISE Programme is a part of set of measures Pakistan has undertaken towards recovery from the impact of the pandemic. The health crisis is expected to have far ranging and long-term repercussions on growth, which may undermine the hard-fought progress the country has made in restoring macroeconomic stability. Already, employment in the formal and informal sectors has seen a downturn with the poor, women and other vulnerable groups disproportionately affected.

“The pandemic has rapidly evolved in Pakistan and now threatens to undo many of the hard-won gains made in reducing poverty over the past two decades,’ said AIIB Vice President, Investment Operations, Konstantin Limitovskiy. ‘Our immediate support is critical and will contribute to the government’s efforts to mitigate pandemic-related shocks, so that the country may continue on its path to sustainable development.’

The latest loan brings AIIB total support to Pakistan’s COVID-19 response to USD750 million. In June this year, Pakistan had received amount $1.5 billion under COVID-19 Active Response and Expenditure Support (CARES) program. The CARES programme is facilitated by parallel cofinancing of $500 million each from the Asian Infrastructure Bank (AIIB) and the World Bank to support Pakistan in addressing the challenges from COVID-19.

While AIIB does not have a regular instrument for policy-based financing, the Bank is extending such financings on an exceptional basis under its COVID-19 Crisis Recovery Facility (CRF) created to support its members through projects cofinanced with the World Bank or the Asian Development Bank.

As of July 2020, AIIB’s Board of Directors has approved a total of 16 projects under the CRF amounting to over USD5.9 billion to support 12 members in navigating the challenges of these highly uncertain times. AIIB is reviewing additional projects from its clients.