The Asian Development Bank (ADB) has approved a policy-based $300 million loan for Pakistan to improve its trade competitiveness, help export diversification, and aid its macroeconomic stability.
“While COVID-19 hit Pakistan at a critical point in its macroeconomic recovery, the government’s ongoing efforts to ensure stability have started showing encouraging results this fiscal year,” said ADB Principal Public Management Specialist Hiranya Mukhopadhyay.
He added that the programme will support these efforts and help Pakistan to improve its export competitiveness — now more important than ever given the impacts of the pandemic.
The programme seeks to help Pakistan recover its current account deficit and continue facilitating the country’s export diversification.
The ADB programme explicitly mentions tariff and tax-related reforms in Pakistan. Ostensibly meant to help improve and further strengthen key institutions, including accreditation bodies, the Export-Import Bank of Pakistan, and the Pakistan Single Window, these preconditions for Pakistan intend to reduce or abolish tariffs and ad hoc duties on a large number of raw materials and intermediate goods.
Steps are also intended to introduce e-commerce, strengthen key institutions involved in facilitating trade, and enhance the export certification process.
The ADB has noted that since 2004, Pakistan has registered a rise-and-fall pattern of export growth reflecting underperformance in its export industry and long-term decline in export competitiveness. This has been compounded by the lost export growth from COVID-19, which has reduced high-income countries’ demand for manufacturing goods and disrupted the supply of raw materials.
The ADB is coordinating its efforts with other development partners and donors while the program is running concurrently with International Monetary Fund-led reform initiatives.