Islamabad:
The Asian Development Bank (ADB) has postponed the approval of a financing package of $ 800 million for Pakistan for five days at the request of India that sought time to evaluate loan documents, exposing failures in the Book of Rules of the lender that allow such extensions.
Government officials told The Express PAkGazette that the ADB Board meeting had been convened for May 28 to approve the budget support loan of $ 300 million and another $ 500 million in guarantees to obtain foreign commercial loans.
The meeting did not take place on Wednesday and Pakistan had been informed in advance. The meeting has been rescheduled until June 3, government officials added.
When it was contacted, the Secretary of Economic Affairs, Dr. Kazim Niaz, confirmed that the meeting of the ADB Board was scheduled for May 28, but has been postponed for five days at the request of the Indian Executive Director.
The secretary said that, according to ADB rules, any director can seek a unique extension on the date and India benefited from this rule. The ADB country office did not respond to a request for comments on development.
The Indian movement occurred after it could not block the approval of the second section of loans worth $ 1 billion by the International Monetary Fund. The postponement of the ADB emphasizes that the Pakistani representatives in the World Bank, the IMF, the Asian Infrastructure Investment Bank and the ADB will have to adopt a proactive approach to protect the economic interests of the country.
After facing the defeat at the hands of the Armed Forces on the battlefield, India has begun to press against the economic interests of Islamabad. The postponement of five days has not affected Pakistan’s external financing plans and the money is expected to flow in the accounts of the Central Bank after the approval of the Board on June 3.
Independent economic analysts say that the government should reduce their dependence on foreign loans, particularly in budgetary support loans. The $ 800 million package of ADB is not intended for any purpose of development and guarantees and guarantees will be used to build currency reserves.
Dr. Niaz said there was no period in part of the federal government or its nominated at the Board, since the ADB rules allowed extension. He said that when India sought the postponement of the meeting of the Board, the Government assumed the matter at the highest level in the ADB.
The management and almost all the directors of the Board had supported the point of view of Pakistan, which resulted in taking the next date for the meeting of the Board, said the secretary.
Pakistan’s opinion was that international forums cannot be used to resolve the political scores of member countries, he added.
The Government had reached an understanding with two foreign commercial banks for a loan of $ 1 billion in the back of ADB guarantees due to its low credit rating. The final term sheet and loan disbursement are subject to the approval of the guarantee of $ 500 million of the ADB.
Pakistan can borrow up to $ 1.5 billion of foreign commercial loans against the guarantee of $ 500 million, government sources said.
The gross reserves of Pakistan are at $ 11.4 billion, which the Government wants to increase to more than $ 14 billion at the end of June. The reserves will increase to the back of the best than expected remittances, the new commercial loan backed by ADB of $ 1 billion and the refinancing of the Chinese loans, the sources said.
The ADB will charge an initial nominal rate for giving the guarantee. Despite a recent qualification update, Pakistan’s credit qualification remains low in negative B, which are two notches below the investment grade. Fitch updated Pakistan of a risk of substantial breach to a high risk of breach rating.
For the current fiscal year, the Government has budgeted $ 3.8 billion in foreign commercial loans, but disbursements remain low due to the low credit rating. China is expected to refine commercial loans of $ 3.7 billion before the end of next month.
The $ 300 million policy loan of ADB is the second section under the resource mobilization program, which the Government wants to take to improve tax collection by the Federal Income Board. However, there have been criticism for taking loans for purposes, which do not require foreign funds.
Pakistan has met all the above conditions to obtain the second section of ADB loan.
The spokesman for the local office of the ADB had been asked to comment on the change in the schedule of the meeting of the Board and if the ADB can allow its platform to be used by member countries to achieve its political objectives.
People who deprive the functioning of the ADB said that any member, including Pakistan, can request a delay for two business days to carry out more due diligence for any loan.
