Pakistan will receive a $500 million loan from the Asian Infrastructure Investment Bank (AIIB) as co-financing for the BRACE development program, Finance Minister Ishaq Dar said on Wednesday.
“Board of Asian Infrastructure Investment Bank (AIIB) has today approved $500 million as co-financing of Asian Development Bank-funded BRACE program for Pakistan,” the finance minister said in a Twitter post.
AIIB’s Vice President of Investment Operations Konstantin Likitovskiy and Special Secretary FinanceAwais Manzoor Sumra signed the $500 million loan agreement during COP27 meetings in Sharm El-Sheikh, Egypt. Federal Minister for Climate Change, Senator Sherry Rehman witnessed the agreement signing.
“These funds will be received by the State Bank of Pakistan within November 2022,” Dar announced.
Dar had revealed earlier this week that the AIIB board had approved the $500 million loan program for Pakistan.
The BRACE, or Building Resilience with Active Counteryclical Expenditures, Program is an Asian Development Bank (ADB) financing initiative to help developing countries and vulnerable societies deal with the economic crisis and avoid social fallouts.
Pakistan desperately needs dollar inflows to boost its depleting foreign exchange reserves and stabilize its currency market, as the Pakistani rupee is trading at historic lows against the United States (US) dollar.
State Bank of Pakistan announced on Nov. 10 that Pakistan’s foreign reserves had dropped by $956 million to reach $7.96 billion due to external debt repayments.
ADB recently gave Pakistan $1.5 billion, but the amount failed to ease off the pressure on the rupee.
“Major external debt repayments executed during the week include repayment of GoP (Government of Pakistan) commercial loans,” the State Bank of Pakistan (SBP) said.
“Refinancing of these loans is in the process which will improve foreign exchange reserves in coming weeks.”
Pakistan is also expected to receive around $400 million from the World Bank under the Resilient Institutions for Sustainable Economy (RISE-II) program.