ADB approves $300 million loan to help strengthen Pakistan’s finance sector

ADB approves $300 million loan to help strengthen Pakistan’s finance sector
Manila: The Asian Development Bank (ADB) has approved a $300 million policy-based loan to develop capital markets and encourage private sector investment in the country.

According to ADB’s Senior Project Officer Sana Masood, Capital markets act as a major catalyst in transforming the economy into a more efficient, innovative, and competitive marketplace.

“The reforms proposed under this program will lower the cost of financial intermediation and facilitate private sector investment to generate sustainable growth and job opportunities. It will also mitigate the negative impact of capital market instability on the economy and help to diversify Pakistan’s financial system,” she said.

Currently, Pakistan’s capital markets play a limited role in financial intermediation and resource mobilization. The Pakistan Stock Exchange (PSX) lacks depth in terms of the number of investors and the number of companies raising capital.

ADB has supported the development of Pakistan’s financial markets through three policy-based loans over the past two decades.

The Third Capital Market Development Program will augment the size and capacity of capital markets and support reforms that enhance the institutional and regulatory capacity of relevant government bodies.

It will also diversify the investor base, develop important market infrastructure such as surveillance systems, and improve the supply of alternative financial instruments. Additionally, the program will help the government to strengthen its debt management proficiency.

The government and ADB have agreed to anchor the program to the design of a long-term national capital market master plan to build strong government ownership and coordination across the agencies. ADB will also provide an $800,000 technical assistance to support the implementation of key reform actions under the program.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.