ISLAMABAD             -         Pakistan has signed two financing agreements valuing $750 million with the World Bank (WB) and the Asian Infrastructure Development Bank (AIIB) for the Resilient Institutions for Sustainable Economy (RISE) programme. The World Bank will extend financing of $500 million and Asian Infrastructure Investment Bank (AIIB) will provide co-financing of $250 million for the RISE programme. Ministry of Economic Affairs Secretary Noor Ahmed signed the two loan agreements on behalf of Government of Pakistan while World Bank (WB) Country Director Patchamuthu Illangovan and Asian Infrastructure Investment Bank (AIIB)Vice President Mr. Konstantin Limitovsriy signed agreements on behalf of the WB and AIIB respectively.

This is concessional financing in the form of budgetary support that is being provided by the two IFIs under Resilient Institutions for Sustainable Economy (RISE), Development Policy Financing with the objective to (i) enhancing the policy and institutional framework to improve fiscal management, and (ii) improving the regulatory framework to foster growth and competitiveness.

The efforts aimed at strengthening fiscal management will support the ongoing stabilisation efforts of the government. The programme also includes actions that respond to the immediate COVID-19 pandemic needs and addresses medium-term reforms. 

Upon signing of the loan agreements, the amount of $750 million will be immediately disbursed to Pakistan in one tranche by the WB and the AIIB in next few days. The disbursements under the programme will strengthen foreign exchange reserves and provide liquidity for the economy.

The inflow of loan would help in building the country’s foreign exchange reserves. The reserves are continuously improving due to the inflows of loans from international financial institutions. The total liquid foreign reserves held by the country stood at $18.952 billion on July 10 2020.The break-up of the foreign reserves position is as foreign reserves held by the State Bank of Pakistan are $12,054.9million and net foreign reserves held by commercial banks are $6.897 billion.

In June this year, Pakistan had received amount $1.5 billion under COVID-19 Active Response and Expenditure Support (CARES) programme. The CARES programme is facilitated by parallel co financing of $500 million each from the Asian Infrastructure Bank (AIIB) and the World Bank to support Pakistan in addressing the challenges from COVID-19.

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.