Federal Minister for Economic Affairs Omar Ayub Khan acknowledged on Friday the receipt of $300 million from the Asian Development Bank (ADB) for energy sector reforms. The development comes after Pakistan and the ADB signed six financing loan agreements worth $1.544 billion.
Apart from the energy sector, the funds received will also help strengthen foreign exchange reserves and stabilise the exchange rate, stated Economic Affairs Division in a statement.
Foreign exchange reserves held by the State Bank of Pakistan (SBP) decreased $415 million on a weekly basis, clocking in at $18.15 billion, showed data released on Thursday.
On the other hand, Pakistan’s rupee continued its struggle against the US dollar, hovering around the 178 level in the inter-bank market.
Meanwhile, Ayub said that the approval of this programme shows the confidence of international financial institutions (IFIs) and multilateral development banks (MDBs) on the reform agenda of the Government of Pakistan and its successful implementation.
Ayub reiterated the government’s commitment to further continue reforms in economy, energy, capital markets, revenue and governance, etc.
He added that Energy Sector Reform and Financial Sustainability Program helped the government to (i) secure financial sustainability by controlling the accumulation of and reducing circular debt; (ii) strengthen governance; and (iii) reinforce infrastructure improvements.
Earlier this month, ADB approved the funding for the said program. The financing is part of the second subprogram of ADB’s Energy Sector Reforms and Financial Sustainability Program, which aims to improve the governance of Pakistan’s energy sector and reduce and manage the accumulated cash shortfall across the power supply chain known as circular debt.
The first subprogram in the amount of $300 million was approved in December 2019.