Asian Development Bank commits $6 billion aid package

ISLAMABAD: The Asian Development Bank (ADB) unveiled a substantial aid package for Pakistan, pledging $6 billion over the next three years.

The Country Director of the Asian Development Bank confirmed that the funding will be allocated at $2 billion per year for Pakistan. It is aimed at improving the inflation-hit country’s economic recovery and development efforts.

Read more: SCO: Will there be a holiday on October 14, 15, 16?

In particular, around $2.8 billion of the total amount will be provided under soft term, allowing the cash-strapped Pakistan to get a huge loan on lower interest rates and extended repayment schedules. 

The financial support arrived at a critical time for Pakistan, which has been facing severe economic difficulties in recent years.

In 2023 alone, the country of 240 million experienced an alarming inflation rate that spiked past 27 per cent. This significantly diminished the purchasing power of its citizens.

The economic crisis was exacerbated by a sharp deprecation of the rupee, losing nearly 30 per cent of its value against the US dollar. This resulted in skyrocketing import costs and heightened strain on households, who mostly rely on a single earner.

The fiscal deficit also reached alarming levels, with estimates indicating that it surpassed 7 per cent of the GDP.

The combination of rampant inflation, currency devaluation and escalating fiscal deficits has created a precarious environment for both, businesses and consumers. This lead to a widespread economic instability.

Read more: Senate panel launches investigation into excessive medical college fees

The ADB’s aid package will reportedly be directed towards essential sectors such as infrastructure, social services and poverty alleviation, all of which are critical for improving long-term economic growth.