Pakistan receives $500 million loan from ADB to strengthen climate resilience

KARACHI: Pakistan has successfully received a $500 million loan from the Asian Development Bank (ADB), as confirmed by the State Bank of Pakistan (SBP). In a statement released on Friday night, the SBP announced that the funds are part of a loan intended for the government’s Climate Change and Disaster Resilience Enhancement Program (CDREP).

These funds will be reflected in the SBP’s foreign exchange reserves for the week ending November 29, 2024, with updated figures to be published on December 5, 2024. This disbursement is expected to strengthen the SBP’s foreign exchange reserves, potentially pushing them beyond the $12 billion mark by the end of November 2024. As of November 22, 2024, the SBP’s reserves were recorded at $11.42 billion, sufficient to cover over two months’ worth of import expenses.

Earlier this month, SBP Governor Jameel Ahmed expressed optimism about the upward trend of the reserves, projecting they would reach the $12 billion threshold by the end of November, supported by ongoing growth.

In addition to this loan agreement with ADB under the CDREP, aimed at enhancing Pakistan’s capacity to manage the risks posed by natural disasters and climate change, analysts believe that the influx of funds and the increase in foreign exchange reserves will further improve the external current account, which is already in surplus. This positive trend is bolstered by strong remittances from workers, increased export growth, and the receipt of the first tranche from the IMF’s Extended Fund Facility (EFF) program.

For the period of July to October in FY25, Pakistan recorded a current account surplus of $218 million, a significant turnaround from a deficit of $1.528 billion during the same timeframe last year. During this period, workers’ remittance inflows reached $11.850 billion, marking a 35 percent increase compared to the previous year.