Islamabad [Pakistan], December 15 : The Pakistan government on Saturday entered into a USD 330 million loan agreement with the Asian Development Bank (ADB) for the Integrated Social Protection Development Programme (ISPDP), Dawn reported on Sunday.
The loan agreement was signed by Economic Affairs Secretary Kazim Niaz and ADB Country Director Emma Fan.
During the signing ceremony, Niaz emphasised the significance of this additional funding, highlighting its role in bolstering institutional capacity and improving access to essential services like education and healthcare. He also expressed appreciation for ADB's ongoing support in these areas.
In her remarks, Fan reiterated ADB's commitment to assisting Pakistan in enhancing its social safety nets. She noted that the additional financing would play a crucial role in promoting inclusive growth, reducing poverty, developing skills, and expanding healthcare access for vulnerable populations, according to Dawn.
Meanwhile, the World Bank cancelled a budget support loan of over USD 500 million to Pakistan after Islamabad failed to meet key conditions on time, including the revision of power purchase agreements under the China-Pakistan Economic Corridor (CPEC), as reported by The Express Tribune on Friday.
The Washington-based lender also announced that it will not provide any new budget support loans during the current fiscal year, which could affect the government's expectation of receiving USD 2 billion in fresh loans. A key reason for this decision is that Pakistan has largely exhausted its loan quota as reported by Express Tribune.
Government sources revealed that the World Bank had cancelled the USD 500 to 600 million loans under the Affordable and Clean Energy program (PACE-II). Initially, the bank had agreed to provide 500 million, later increasing the amount to 600 million to help bridge Pakistan's external financing gap.
The PACE program was approved by the World Bank in June 2021, with the first tranche of USD 400 million already released. However, the second tranche was contingent on several conditions, including negotiations with all Independent Power Producers (IPPs), notably the Chinese power plants established under CPEC.
According to the Express Tribune report Pakistani authorities said that no progress was made in renegotiating agreements with CPEC-related power plants. China has repeatedly rejected reopening these deals, including restructuring the energy debt, which totals around USD 16 billion, the sources added.
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