Pakistan tops ADB loans, incurs more debt
Pakistan has become the largest recipient of the Asian Development Bank (ADB)-funded programmes/projects in 2022, as per the ADB Annual Report 2022. Out of the total disbursement of over USD 31.8 billion to 40 countries, Pakistan received loans of USD 5.58 billion. However, these loans have been utilized to prevent default, and the country has incurred further debt to pay off previous debt. Pakistan received concessional funding of USD 2.67 billion from the bank last year, conditional on obtaining loans from the International Monetary Fund (IMF). The report also highlighted Pakistan’s vulnerability to climate change, exacerbated by devastating floods that killed over 1,700 people and directly affected 33 million people.
The situation in Pakistan’s economic crisis is worrisome, and there seems to be no reliable method of resolving the problem. While embezzlement and corruption played a role, foreign borrowing has also contributed to the debt crisis. Multilateral institutions like the IMF and ADB have been funding Pakistan’s loans, but even friendly countries are now tying aid to the IMF loan. Pakistan’s Parliament has not exercised proper oversight over foreign borrowing, treating it as a foreign relations issue, and the country’s political instability and military interference are exacerbating the economic chaos.