Islamabad:
The Asian Development Bank (BAD) has postponed the approval of a funding set of $ 800 million for Pakistan for five days at the request of India which requested time to assess the loan documents, exposing defects in the lender’s rules of rules which authorizes such extensions.
Government representatives told L’Express PK Press Club that the BAD board of directors was summoned on May 28 to approve the budgetary support for $ 300 million and $ 500 million in guarantees to obtain foreign commercial loans.
The meeting did not take place on Wednesday and Pakistan had been informed in advance. The meeting was postponed to June 3, the government’s representatives added.
When he was contacted, the secretary of economic affairs, Dr. Kazim Niaz, confirmed that the meeting of the BAD board of directors was scheduled for May 28, but was postponed for five days at the request of the Indian Executive Director.
The secretary said that by virtue of the BAD rules, any director can request a single extension on the date and that India took advantage of this rule. The Pays de l’ADB office has not responded to a request for development comments.
The Indian move intervened after it did not blocked the approval of the $ 1 billion loan tranche for the International Monetary Fund. Bad’s postponement stresses that Pakistani representatives of the World Bank, IMF, the Asian infrastructure investment bank and the AfDB will have to adopt a proactive approach to protect the economic interests of the country.
After faced the defeat in the hands of the armed forces on the battlefield, India began to put pressure against the economic interests of Islamabad. The postponement of five days did not have an impact on the external financing plans of Pakistan and the money should circulate in the accounts of the central bank after the approval of the board of directors on June 3.
Independent economic analysts claim that the government should reduce its dependence on foreign loans, in particular on budgetary support loans. The package of $ 800 million in the AfDB is not intended for development purposes and money and the guarantees will be used to build the exchange reserves.
Dr. Niaz said there was no forfeiture on part of the federal government or his candidate for the board of directors, because the BAD rules have allowed the extension. He said that when India had asked for the postponement of the meeting of the Board of Directors, the government took the question at the highest level of the AfDB.
The management and almost all the administrators of the board of directors had supported the point of view of Pakistan, who led to the next date of the meeting of the Board of Directors, said the secretary.
Pakistan’s point of view was that international forums cannot be used to settle the dozens of member countries, he added.
The government had reached an understanding with two foreign commercial banks for a loan of $ 1 billion on the back of the BAD guarantees because of its low credit rating. The final sheet and the disbursement of loans are subject to the approval of the guarantee of $ 500 million in the AfDB.
Pakistan can borrow up to $ 1.5 billion in foreign commercial loan compared to the $ 500 million warranty, government sources said.
Pakistan’s gross reserves amounted to $ 11.4 billion, which the government wants to increase to more than $ 14 billion by the end of June. The reserves will increase on the back of better than expected funds, $ 1 billion in the BAD -supported business loan and the refinancing of Chinese loans, sources said.
The BAD will invoice nominal initial costs for giving the warranty. Despite a recent upgrading of the rating, the Pakistan credit rating remains low at B Negative, which are two notches below the investment note. Fitch has improved Pakistan from a substantial defect risk of a high risk of default.
For the current financial year, the government has budgeting $ 3.8 billion in foreign commercial loans, but disbursements remain low due to the low credit rating. China is expected to refinance commercial loans of $ 3.7 billion before the end of next month.
The political loan of 300 million Dollars of the BAD is the second tranche as part of the resource mobilization program, which the government wishes to take to improve tax collection by the Federal Board of Return. However, there have been criticisms to contract loans for purposes, which do not require foreign funding.
Pakistan has fulfilled all the previous conditions to ensure the second BAD loan tranche.
The local spokesman for the BAD had been invited to comment on the schedule of the meeting of the board of directors and if the BAD can allow its platform to be used by member countries to achieve their political objectives.
The people aware of the functioning of the AfDB declared that any member, including Pakistan, can request a delay for two working days to undertake more reasonable diligence for any ready.
