Pak plans to seek USD 2 bn in new loans from World Bank, ADB: report

The cash-strapped Pakistan government plans to seek USD 2 billion in new foreign loans from the global financial bodies to respond to the COVID-19 outbreak and undertake fiscal reforms amid the rapid deterioration of public debt indicators, a media report said on Wednesday.

The loans that Pakistan is seeking to obtain from the World Bank and the Asian Development Bank (ADB) are higher than the USD 1.8-billion debt relief that Islamabad has sought from the G20 nations, The Express Tribune reported.

The new plan comes as the ADB and Pakistan have finalised a USD 305 million emergency COVID-19 loan to help the country buy medical equipment and disburse money to poor women.

The Asian Development Bank will extend the loan on commercial terms.

Last month, Pakistan had received an emergency loan of USD 1.39 billion from the International Monetary Fund (IMF) and an aid of USD 200 million from the World Bank.

The new proposal for USD 2 billion loan comes as the Ministry of Finance presented over half a dozen concept clearance papers for approval by the Central Development Working Party (CDWP) that met on Tuesday under the chairmanship of Planning Commission Deputy Chairman Jehanzeb Khan.

The concept clearance papers would be considered for approval on Wednesday when the CDWP meets again, the paper reported.

Once the CDWP clears concept papers of these loans, the board of directors of the World Bank and ADB would approve the loans, it said.

Pakistan's public debt is projected to increase to Rs 37.5 trillion or a whopping 90 per cent of gross domestic product (GDP) by June this year.

The country will this year spend Rs 2.8 trillion or 72 per cent of the estimated Federal Board of Revenue (FBR) tax collection on public debt servicing alone, the report said.