ISLAMABAD: The Asian Infrastructure Investment Bank (AIIB) on Tuesday transferred $500 million in program financing to the government of Pakistan, the country’s finance minister Ishaq Dar said.
The loan would help the South Asian country mitigate the adverse socio-economic effects of economic crises, aggravated by recent floods that have affected 33 million people. Pakistani authorities estimate the damage incurred losses between $10 billion to $40 billion.
“Asian Infrastructure Investment Bank (AIIB) has transferred today, as per their Board’s approval, to State Bank of Pakistan/Government of Pakistan US $500 million as program financing,” Dar announced on Twitter.
The AIIB has provided the loan under the Building Resilience with Active Countercyclical Expenditures (BRACE) program, which is an Asian Development Bank (ADB) financing initiative to enhance the resilience of poor and vulnerable groups to socio-economic shocks.
“The agreement was signed from the AIIB side by Konstantin Likitovskiy, Vice President of Investment Operations, and Awais Manzoor Sumra, special secretary of finances from the Pakistani side,” the finance ministry said in a statement earlier this month.
The cash-strapped South Asian country desperately needs dollar inflows to boost its depleting foreign exchange reserves and cool down its currency market, where the local currency is trading at historic lows against the United States (US) dollar.
Pakistan recently received $1.5 billion in inflows from the ADB but the amount failed to ease off the pressure on the rupee.
Pakistan is also expected to receive around $400 million from the World Bank under the Resilient Institutions for Sustainable Economy (RISE-II) program. RISE-II had been delayed to accommodate the processes required by the government to implement the reforms outlined in the program.
