• The Asian Development Bank (ADB) has assured Pakistan it will provide $2 billion annually in new loans to the cash-strapped country amid the government’s inability to get cheaper credit due to its worsened ratings.

• The assurance was given by the visiting Asian Development Bank (ADB) President Masatsugu Asakawa during his interaction with Pakistani authorities on September 16.

• Despite having reached a staff-level agreement with the International Monetary Fund (IMF), Pakistan has become a desperate borrower in recent years, striking deals at unsustainably higher interest rates — ranging from 7 per cent to as high as 11 per cent.

• Three international credit rating agencies have placed Pakistan below the investment grade, a major hurdle in tapping the foreign capital markets.

• ADB plans to provide Pakistan with an average annual assistance package of more than $2 billion over the next several years, focusing on climate-resilient infrastructure, social protection programmes, and institutional reforms to foster sustainable development.

• During his visit to Pakistan, Asakawa had meetings with Pakistan President Asif Ali Zardari and Prime Minister Shahbaz Sharif. 

• Agreements were signed for two major projects: the Sindh Emergency Housing Reconstruction Project and the Khyber Pakhtunkhwa Rural Roads Development Project. 

• The $400 million Sindh Emergency Housing Reconstruction Project is aimed at helping Pakistan rebuild and recover from the devastating 2022 floods. 

• The $320 million Khyber Pakhtunkhwa Rural Roads Development Project will rehabilitate about 900 kilometers of rural roads, enhancing connectivity and strengthening the provincial government’s capacity to protect communities from future climate-related events.

Asian Development Bank

• The Asian Development Bank (ADB) envisions a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty in the region.

• From 31 members at its establishment in 1966, ADB has grown to encompass 68 members — of which 49 are from within Asia and the Pacific and 19 outside.

• ADB assists its members, and partners, by providing loans, technical assistance, grants, and equity investments to promote social and economic development.

• ADB maximises the development impact of its assistance by facilitating policy dialogues, providing advisory services, and mobilising financial resources through co-financing operations that tap official, commercial, and export credit sources.

• Committed to pursue a differentiated approach for states at different stages of development, ADB prioritises projects on basic services, critical infrastructure and services, institutional strength, and private sector development through sovereign operations in low-income states.

• Support for more developed states focuses on transformational programmes with policy and knowledge advice, combined with non-sovereign operations.

History of ADB

• ADB was conceived in the early 1960s as a financial institution that would be Asian in character and foster economic growth and cooperation in one of the poorest regions in the world.

• A resolution passed at the first Ministerial Conference on Asian Economic Cooperation held by the United Nations Economic Commission for Asia and the Far East in 1963 set that vision on the way to becoming reality.

• The Philippines capital of Manila was chosen to host the new institution, which opened on December 19, 1966, with 31 members that came together to serve a predominantly agricultural region. Takeshi Watanabe from Japan was ADB’s first president.

ADB and India

• India was a founding member of ADB in 1966 and fourth largest shareholder.

• ADB started operations in India in 1986.

• As of December 31, 2023, ADB has committed 623 public sector loans, grants, and technical assistance totaling $55.3 billion to India. ADB’s current sovereign portfolio in India includes 67 loans worth $14.15 billion.

• Cumulative sovereign and non-sovereign loan and grant disbursements to India amount to $43.45 billion. These were financed by regular ordinary capital resources and other special funds.

• ADB said it will continue to focus on projects and programmes that accelerate India's structural transformation, create jobs, address infrastructure gaps, promote green growth, and foster social and economic inclusiveness while deploying smart technologies and innovations.

• In 2023, ADB approved additional funding to support India’s national industrial corridor development programme to enhance its manufacturing competitiveness along with a loan for Visakhapatnam-Chennai Industrial Corridor Development.

• Two policy-based loans were committed to support the government’s urban reforms agenda at the state level and power sector reforms to facilitate the shift to renewable energy.

• In addition, ADB provided funding for expanding urban services in Uttarakhand, Rajasthan, and Tripura, improving road connectivity in Bihar and Madhya Pradesh, expanding Delhi-Meerut rapid rail transit corridor and boosting horticulture development in Himachal Pradesh.

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