ADB approves $300 mln loan to develop Pakistan’s capital markets

Author: APP
 

 

ISLAMABAD: The Asian Development Bank (ADB) Tuesday approved a $300 million loan to further develop Pakistan’s capital markets, promote private investment in the country, and help to mobilise domestic resources to finance sustainable growth.

The second subprogram of ADB’s Third Capital Market Development Program builds on institutional and regulatory reforms put in place under the first subprogram approved in 2020.

It aims to catalyse institutional investor demand and increase the range of alternative financial instruments such as derivatives and commodity futures that are available to investors, says a press release issued by the ADB.

“For several years ADB has been Pakistan’s lead development partner in supporting the evolution of its capital markets,” said ADB Director General for Central and West Asia Yevgeniy Zhukov. “By making the country’s capital markets more robust and strengthening government debt stamanagement, this new program will also help to mobilise more domestic resources which support the government’s efforts to finance sustainable growth and respond effectively to crises.”

Pakistan’s finance sector is dominated by banks and this lack of diversification increases the risk of the country not being able to withnd financial shocks and periods of uncertainty. Moreover, the Pakistan Stock Exchange lacks depth in terms of the number of investors which access it and the number of companies raising capital, while Pakistan’s bond market is almost completely dominated by government borrowing.

ADB’s program supports policy actions that will strengthen market stability and attract investor capital to Pakistan. These include structural reforms within the Securities and Exchange Commission of Pakistan that will improve governance and regulatory capacity. It supports measures that will strengthen the government debt market and enhance market surveillance systems that facilitate information exchange. The program also promotes an enabling environment to expedite access to financing for growth companies and state-owned enterprises.

“These reforms will help to mobilise financial resources for productive investment, especially by the private sector, and help facilitate economic growth by developing the bond and equity capital markets,” said ADB Economist Sana Masood. “This will help reduce the cost of financial intermediation and help stabilise systemic vulnerabilities in the bank-dominated finance system.”

The ADB said it was committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific, while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members.






Share
Leave a Comment

Recent Posts

  • Pakistan

Parliament passes bills on military chiefs tenure extension, SC expansion

The National Assembly on Monday passed six bills, including one seeking an increase in the…

7 hours ago
  • Pakistan

SBP cuts key policy rate by 250bps to 15pc

The State Bank of Pakistan (SBP) announced on Monday that it had decided to cut…

15 hours ago
  • Pakistan

Verdict reserved on Imran, wife’s bail pleas in 7 cases

The district and sessions court in Islamabad on Monday reserved its verdict on bail pleas…

15 hours ago
  • Pakistan

Six terrorists killed in two KP operations

At least six terrorists were killed by the security forces in two separation operations in…

15 hours ago
  • Pakistan

Punjab has no plan to buy PIA, clarifies minister

Punjab Information Minister Azma Bokhari on Monday said that the provincial government had "no intentions"…

15 hours ago
  • World

Israeli strikes kill 10 in Gaza, keep up pressure on north

Israeli airstrikes killed at least 10 Palestinians in Gaza, with seven dead in an attack…

15 hours ago