Islamabad, April 29
Pakistan has become the largest recipient of the Asian Development Bank (ADB)-funded programs/projects in the year 2022, reported Pakistan Today.
According to the ADB Annual Report 2022, released on Monday, out of total disbursement of over USD 31.8 billion to 40 countries, Pakistan received loans of USD 5.58 billion.
Pakistan is in a deep economic crisis and out of the total lending of USD 5.58 billion, Pakistan received concessional funding of USD 2.67 billion from the bank last year.
However, these loans have been used by Pakistan to avert default. These loans were conditional on Pakistan obtaining loans from the IMF, which imposed its own conditionalities, reported Pakistan Today.
One issue has been that loans have not been used to finance projects which could raise revenue and pay off the loans; in recent times, debt has been incurred to pay off previous debt.
The idea is to keep Pakistan from defaulting, and thus keep open access to foreign money markets. That access is needed to borrow more to meet loan repayments.
The report highlighted the region’s vulnerability to climate change as Pakistan was also hit by devastating floods that killed more than 1,700 people, directly affected 33 million people, caused damages in billions of dollars, and worsened an already fragile economic situation, reported Geo News.
One of the most worrisome aspects of the situation is that nobody seems to have a reliable method of resolving the problem. While embezzlement and corruption played a role, it is clear that one reason for incurring the debt.
If multilateral institutions like the IMF and ADB drew back, Pakistan turned to bilateral aid from friendly countries. Now even those countries seem to have grown tired of purring more money into what appears to be a bottomless pit and have tied aid to the IMF giving its loan, reported Pakistan Today.
Moreover, Pakistan’s Parliament has been so prickly about asserting its supremacy in financial matters, to exercise oversight over all borrowing.
Foreign borrowing is treated as a foreign relations issue, and Parliament is patted on the head and told not to bother about it. Even though it will have to shell out vast sums to service that debt, reported Pakistan Today.
Meanwhile, political instability and military interference are leading Pakistan nowhere amid ensuing economic chaos.