The Program’s objective is to mitigate the significant negative economic and social impacts caused by the COVID-19 pandemic. The Program will enable the GoP to effectively manage COVID-19 outbreak and reduce its immediate social and economic damages.
This Program is proposed to be supported under the COVID-19 Crisis Recovery Facility (the Facility) of the Bank and co-financed with the Asian Development Bank (ADB) as a policy-based loan under ADB’s Countercyclical Support Facility COVID-19 Pandemic Response Option (CPRO).
The COVID-19 pandemic has significantly impacted Pakistan’s ability to continue with the ongoing economic recovery program initiative and sustain high and inclusive growth. ADB estimates that both exports and remittances will decline by USD 2 billion during FY2020. Total revenue is expected to decline by almost USD 6 billion and will contribute maximum to Pakistan higher fiscal deficit of 2 percent during FY2020. All the above impacts have already led to significant job losses—both in the formal and the informal sectors.
The Government of Pakistan (GoP) has acted quickly to approve a health sector and counter-cyclical development expenditure program. Total countercyclical development expenditure package of $7.2 billion consists of three broad areas to support: health measure, social safety net measure and economic stimulus measures. Additionally, GoP has also approved a comprehensive COVID-19 Strategic Preparedness & Response Plan (Plan) including $595 million in financing for priority activities on 23 April 2020. These expenditure allocations contain specific strategies for protecting the poor and vulnerable, including women; augmenting the health sector capacity and supplies; and protecting productive sectors and small businesses from economic downturn. AIIB’s financing under CARES program is provided through general budgetary support for the purpose of meeting gaps in the GoP’s development financing needs.
This Loan will be co-financed with the ADB as lead co-financier, and the Program’s environmental and social (ES) risks and impacts have been assessed in accordance with the provisions of ADB’s Safeguard Policy Statement (SPS) applicable to policy-based lending (PBL). AIIB’s Environmental and Social Policy (ESP) was designed to apply to investment projects and has no provisions for its application to PBL operations. Therefore, as permitted by a decision of the AIIB’s Board of Directors, the provisions of the SPS applicable to PBL will apply to this operation in lieu of AIIB’s ESP. This will ensure a harmonized approach to addressing the ES risks and impacts of the Program.
Under its SPS, ADB has categorized the Program as Category C for each of Environment, Involuntary Resettlement, and Indigenous Peoples, on the basis of an assessment of the countercyclical expenditures to be supported by the Program. These focus on expanding and strengthening social safety nets for the most vulnerable groups and are not expected to have adverse ES impacts. The Program has also been categorized by ADB as “effective gender mainstreaming” at entry, as it will expand the social assistance programs for the poor and vulnerable with clear linkages to women’s welfare. ES monitoring will be conducted based on guidelines and check lists determined by ADB.
Asian Infrastructure Investment Bank
Principal Investment Operations Specialist,
Investment Operations Department, Region 2
Asian Development Bank
Principal Public Management Specialist,
Public Management, Financial Sector, and Trade Division,
Central and West Asia Department
M. Aslam Chaudhary
Joint Secretary, China/AIIB, Economic Affairs Division, Ministry of Economic Affairs Division.
Aamir Nazir Gondal
External Finance Policy, Ministry of Finance, Finance Division