ADB TO GIVE $300M LOAN TO MITIGATE COVID-19 IMPACT
The Newspaper’s Staff Reporter Updated 06 Jun, 2020
ISLAMABAD: The Asian Development Bank (ADB) on Friday signed an agreement with Pakistan for a $300 million emergency loan to help the country mitigate the impact of the coronavirus pandemic.
The board of directors of the Manila-based lending agency had approved the emergency loan on May 19 to strengthen Pakistan’s public health response to the Covid-19 pandemic and help meet basic needs of poor and vulnerable people.
The agreement was signed on behalf of Pakistan by Economic Affairs Division secretary Noor Ahmed and ADB Country Director for Pakistan Xiaohong Yang. Poverty Alleviation and Social Safety Division secretary Yousuf Khan and National Disaster Risk Management Fund (NDRMF) chief executive Nadeem Ahmed signed the project documents.
“The ADB assistance will support Pakistan’s social protection programme Ehsaas to continue providing emergency cash transfers to poor families and women,” said Ms Yang, adding that it would also help swiftly upgrade medical facilities and procure necessary supplies for hospitals and frontline health workers, meet rapid training and capacity building needs and purchase emergency vehicles to strengthen rescue capacity in remote border areas.
The project also aims at strengthening Covid-19 awareness among marginal communities with limited television or internet connectivity and will provide cash assistance to directly benefit women of poor households through the government’s Ehsaas Emergency Cash Assistance Package, launched in response to the Covid-19 pandemic. The government’s cash assistance package is delivered through its Ehsaas Kafalat social protection and welfare programme.
“These payments are designed to meet the basic food needs and necessary living expenses of poor and vulnerable women and families which are the bedrock of Pakistani society,” said ADB’s Project Administration Unit Head and co-team leader of the project Zheng Wu.
Unconditional cash transfers help improve the nutritional intake of poor households and boost women’s economic empowerment, Wu said.
A statement said the Covid-19 pandemic was having a significant detrimental impact on the health and economic prospects of the people of Pakistan and the loan will help build Pakistan’s capacity to cope with the pandemic and other health emergencies.
The government of Norway has also contributed $5.28m grant to strengthen the emergency response system in Khyber Pakhtunkhwa province amid the Covid-19 crisis.
The Asian Development Bank (ADB) and the Pakistan government signed an agreement on Friday to expand support for Pakistan’s response to the Covid-19 pandemic in Khyber Pakhtunkhwa province through the NDRMF.
Published in Dawn, June 6th, 2020
WORLD BANK MAY LOAN $200M TO LESSEN VIRUS IMPACT ON PAKISTAN’S EDUCATION
Amin AhmedUpdated 07 Jun, 2020
ISLAMABAD: The World Bank has initiated preparation of a programme to strengthen federal and provincial governments’ institutions, policies and coordination for reducing the impact of external shocks on the education system, and increasing access to quality education in disadvantaged districts of the country, according to reliable sources.
It is likely that the bank will provide financing of $200 million for the programme. It will focus on response, recovery and resilience for better coordination and innovative alternatives for out-of-school children.
A World Bank team has started working with the government to adjust national priorities as they currently do not account for the medium and long-term effects the Covid-19 virus will have on its ability to provide an equitable quality education.
Pandemic has badly affected a system that faced challenges even before the outbreak of coronavirus
A World Bank document on the project says the current government education strategies will require adjustments to respond to the pandemic, corrective measures to reduce the socio-economic impact on education, and increased preparedness for future emergencies.
The potential economic effects of Covid-19 will likely reduce available resources for the most disadvantaged districts in the country, exacerbating even further regional disparities in education expenditure and, hence, educational outcomes.
The document says that even before the pandemic, the education system in Pakistan faced substantial challenges in access, quality, and management. Before the pandemic, the country had the second highest number of out-of-school children in the world, estimated at 22.8 million children (or 44 per cent of all 51.5 million children) who are not receiving primary or secondary education.
Learning poverty was high: 75 per cent of 10-year-olds cannot read and comprehend an age-appropriate text. In addition, the education system is highly inefficient with high repetition and retention rates.
Under the programme, a federal-to-province performance grant programme would be initiated to offer financial support and on-demand technical assistance to provinces to focus on the most disadvantaged areas in the country.
The Ministry of Federal Education and Professional Training will provide equal per-pupil financial and technical assistance to participating provinces who undertake to work with individual rural and remote areas to further the programme objectives.
The proposed programme will respond to the current Covid-19 crisis, building on the activities under the education component in pandemic response effectiveness in Pakistan project to set up distance learning and create platforms for collaboration with provinces and private sector.
It is expected to help with the recovery by supporting activities to get children, teachers, and administrators, back to school in a safe way, including initiatives to bring back to school those children who are likely to drop out from school given the socio-economic effects of Covid-19.
The programme will disrupt the pre-Covid-19 status quo by setting up a new system of incentives for provinces to invest in the most disadvantaged geographical areas for the country.
Published in Dawn, June 7th, 2020
ADB OKAYS $500M LOAN TO PAKISTAN
The Newspaper’s Staff Reporter Updated 11 Jun, 2020
ISLAMABAD: The Asian Development Bank (ADB) has approved a $500 million loan to Pakistan for social protection, health and fiscal stimulus for growth and job creation.
In a statement, the ADB said the loan would deliver social protection programmes to the poor and vulnerable, expand health sector capabilities, and deliver a pro-poor fiscal stimulus to boost growth and create jobs as the country fights the novel coronavirus.
“The Covid-19 pandemic hit Pakistan at a critical point in its ongoing economic recovery programme,” said ADB President Masatsugu Asakawa. “We are fully committed to supporting Pakistan through this difficult period. This loan will help plug selected funding gaps as the government implements its countercyclical development plan, including strengthening the country’s social safety net and health sector capacity.”
The virus is expected to lead to a sharp decline in growth, revenue collection, and significant job losses in Pakistan. The country’s health response is hampered by a low number of health workers relative to the population and inadequate availability of hospital beds.
The ADB’s Covid-19 Active Response and Expenditure Support (CARES) programme will support various government initiatives, including cash assistance payments to three million daily wage workers, of whom approximately 23pc are women, and cash grants to 7.5m families under the Kifalat social protection scheme.
It will also help fund the acquisition of additional ventilators and Covid-19 protective kits for medical staff, including appropriately sized personal protective equipment for women. To prevent job losses, the loan will support young entrepreneurs, including at least 25 per cent women, through the government’s youth entrepreneur scheme, Kamyab Jawan.
ADB’s CARES Programme will facilitate parallel financing of $500m from the Asian Infrastructure Investment Bank and another $500m from the World Bank’s Securing Human Investments to Foster Transformation (SHIFT) development policy credit scheme.
The loan is funded through the Covid-19 pandemic response option (CPRO) under ADB’s Countercyclical Support Facility. CPRO was established as part of the lender’s $20 billion expanded assistance for developing member countries’ pandemic response, announced on April 13.
The CARES programme is part of ADB’s integrated package of support to help the government’s immediate efforts to mitigate the significant negative health, social, and economic impacts of Covid-19. On May 19, the lender approved a $300m emergency assistance loan to strengthen Pakistan’s public health response to the pandemic and help meet the basic needs of vulnerable and poor segments of society.
On April 9, the ADB reallocated $30m from the National Disaster Risk Management Fund (NDRMF) project whose board of directors allocated an additional $20m to procure medical equipment to strengthen hospitals, and other medical facilities in Pakistan. In March, the bank also approved $2.5m in grants to help Pakistan purchase PPE and other medical supplies.
Published in Dawn, June 11th, 2020
$500M SOUGHT FROM WORLD BANK FOR POLICY REFORMS
A Reporter Updated 18 Jun, 2020
ISLAMABAD: The government is seeking a loan of $500 million from the World Bank to enhance the policy and institutional framework for improving fiscal management and regulatory framework.
It is learnt that the World Bank executive board will approve the government’s request with the start 2020-21 in July.
The proposed Resilient Institutions for Sustainable Economy (RISE) is the first in a programmatic series of three operations focused on addressing foundational reforms through enhancing the policy and institutional framework to improve fiscal management and regulatory framework to foster growth and competitiveness.
RISE is aligned with the government’s Covid-19 crisis response programme which aims at scaling up spending on health and social protection while maintaining macro-fiscal stability in the face of a severe economic contraction.
Meanwhile, Securing Human Investments to Foster Transformation (SHIFT) focuses on reforms to enhance human capital accumulation, increase the contribution of women to economic productivity, and improve federal safety nets to respond to shocks, including those from the stabilisation programme and the Covid-19 pandemic.
Similarly, ‘Programme for Affordable and Clean Energy’ (PACE) would tackle critical power sector reforms, by building on the foundations of RISE to ensure the sector becomes financially viable.
Pakistan has requested debt service suspension from all of its bilateral creditors under the Debt Service Suspension Initiative (DSSI). The country has committed to use the created fiscal space for social, health or economic spending, disclose all debt, and contract no new non-concessional debt during the suspension period, other than agreements under the DSSI or in compliance with limits agreed under the World Bank policy on non-concessional borrowing and the IMF Debt Limit Policy. RISE includes a set of actions that will enhance this transparency.
Published in Dawn, June 18th, 2020
IMF PREDICTS DEEPER GLOBAL DOWNTURN DUE TO VIRUS
AFP 25 Jun, 2020
WASHINGTON: The global coronavirus pandemic has sparked an economic “crisis like no other”, sending world GDP plunging 4.9 per cent this year and wiping out $12 trillion over two years, the IMF said on Wednesday.
Worldwide business shutdowns destroyed hundreds of millions of jobs, and major economies in Europe face double-digit collapses in the worst crisis since the Great Depression nearly a century ago.
The prospects for recovery post-pandemic — like the forecasts themselves — are steeped in “pervasive uncertainty” given the unpredictable path of the virus, the IMF said in its updated World Economic Outlook.
“The Covid-19 pandemic has had a more negative impact on activity in the first half of 2020 than anticipated, and the recovery is projected to be more gradual than previously forecast,” the fund warned.
While businesses are reopening in many countries and China has seen a bigger rebound in activity than expected, a second wave of viral infections threatens the outlook, the report said.
The US economy will likely shrink eight per cent while France, Italy, Spain and Britain will suffer double-digit contractions
World GDP is expected to rebound by just 5.4 per cent in 2021, and only if all goes well, the IMF warned.
IMF chief economist Gita Gopinath said under current forecasts, the crisis would destroy $12 trillion over two years, and cautioned, “we are not out of the woods”. She warned governments against withdrawing the stimulus too quickly.
“This is a crisis that requires all hands on deck,” she told reporters.
While governments and central banks have gone to extraordinary lengths so far to provide support for workers and businesses, “more will be needed”. “It’s important not to back off very quickly, but to do so only gradually, because this crisis is not over,” Gopinath said.
The downturn is particularly damaging for low-income countries and households, and threatens to endanger the progress made on reducing extreme poverty, the Washington-based crisis lender said in its report.
The fund made drastic downward revisions to most of the April forecasts made in the early days of the pandemic, and IMF economists fear the coronavirus will leave lasting scars on employment, businesses and trade.
Hanging over the predictions are the bills for massive government stimulus plans, fueled by extremely low interest rates and likely preventing the recession from turning into another depression, even as they created huge and ever-increasing debt levels.
The damage is nonetheless stunning, and more widespread than any downturn in recent decades.
China will eke out growth of one per cent this year, the only positive figure on the long list of key economies the IMF tracks.
The United States will shrink eight per cent and Germany slightly less, while France, Italy, Spain and Britain will suffer double-digit contractions.
Japan makes out a bit better with a drop of just 5.8 per cent, according to the forecasts.
Mexico also will see a double-digit decline, while Brazil just misses that mark, as does Argentina, which is in the middle of a massive debt crunch on top of its health and economic crises after the country once again defaulted on its foreign obligations.
The IMF pointed to International Labour Organisation data estimating more than 300 million jobs were lost in the second quarter of the year.
“A more prolonged decline in activity could lead to further scarring, including from wider firm closures, as surviving firms hesitate to hire jobseekers after extended unemployment,” the fund warned.
With transport and manufacturing shut down for weeks, the IMF projects global trade volume will collapse by just under 12 per cent — and advanced economies will see an even more dramatic drop.
The IMF also warned of dangers posed by eroding relations between and within countries.
“Beyond pandemic-related downside risks, escalating tensions between the United States and China on multiple fronts, frayed relationships among the Organisation of the Petroleum Exporting Countries (OPEC+) coalition of oil producers and widespread social unrest pose additional challenges to the global economy,” the report said.
Trade disruptions could undermine productivity as firms shift supply chains to try to protect themselves against future breakdowns, and companies also face higher costs as they adopt enhanced cleaning procedures and social distancing requirements.
Amid the uncertainty, there is a chance the recession could be less severe than forecast, the report said.
“Downside risks, however, remain significant,” it warned.
Published in Dawn, June 25th, 2020
GOVT TO SEEK $380 MILLION LOANS FROM WB, ADB TO FIGHT LOCUST
Mehtab Haider June 28, 2020
ISLAMABAD: Amid locust spreading in the Pakistan at alarming pace, the government has decided to seek $380 million loans from the World Bank (WB) and Asian Development Bank (ADB).
“Thus, international support amounting to $1.9 million (DFID $1.2 million, FAO $0.5 million and JICA $0.2 million) has been received while $200 million are committed by World Bank and another $180 million from Asian Development Bank is in process” the economic update shared by Finance Ministry stated on Saturday.
Since 2019, locust is spreading in Pakistan, at an alarming pace and it pushed the government to declare national emergency against desert locust on January 31, 2020. Although after 18th Amendment and devolution of agriculture, provinces have the mandate to maintain basic infrastructure for combating locust, ground operation for the control of locust and logistic support, the federal government at the same time has the mandate for crops protection from locust attack in its international aspect, and for aerial operation. Still, federal government is taking lead for implementation of National Action Plan.
Federal government has provided more than Rs1.0 billion as its share for stage-I under National Action Plan, from January to June, 2020. Provincial governments are also supporting in terms of funds and other resources in combating locust.
National Locust Control Centre (NLCC) was established with the approval of the prime minister with wide composition from federal and provincial government on 1st June, 2020. The NLCC will play a vital role for coordination, surveillance, control and monitoring of locust threat in the country. Revised National Action Plan worth of Rs25 billion is developed (Federal share Rs13.6 billion, provincial share will be Rs11.4 billion). F
urther, for providing support to the locust surveillance and control programme in Pakistan, FAO is taking lead in providing technical and operational support.
On effects of COVID-19 on Pakistan, Ministry of Finance stated that in the context of Pakistan, COVID-19 may have a double-edged impact; through the trade channel and through the remittances. Further, the performance in a number of key sectors (e.g., textiles, autos) has been hit hardly amid anaemic demand.
Business confidence has fallen in both manufacturing and services sectors. Closure of small and medium size enterprises induced significant loss in employment and private investment. Provisional estimates suggest that in FY 2020, Pakistan growth remained negative 0.4 percent, while for FY 2021, GDP growth is projected to be 2.1 percent but predominantly depends upon how the pandemic unfolds.
Policy priorities in most of economies are to lessen the on-going health and human costs and assuage the economic losses. Pakistan’s measures include additional spending on health care, cash transfers, and relief of utility payments. On the fiscal side, the government announced a fiscal stimulus package of Rs1.24 trillion while the State Bank of Pakistan (SBP) provided liquidity support to households and businesses to help them through the ensuing temporary phase of economic disruption.
The SBP has sanctioned Rs6.0 billion for hospitals and Rs8.8 billion for investment purposes. A total of 1,230 companies have availed SBP’s refinance scheme, and a sum of Rs113 billion has been disbursed for wages during three months till June 19, 2020.
It is mentionable that IMFs Rapid Financing Instrument (RFI) amounting to $1.386 billion to counter the economic impacts of this novel outbreak will also support government’s efforts to mitigate the economic shock, the facility will be used to address declining international reserves and increase social sector spending.
Additionally, concessionary lending by IFIs; the World Bank and Asian Development Bank will provide much needed support to the government during this crisis time and help government of Pakistan to tackle the COVID-19 challenge with minimum affects, it concluded.