ASIAN Development Bank agreed to lend US$1.5 billion to Pakistan that has seen default risks surge after devastating floods crippled the cash-strapped country.
The bank approved the loan for social protection, promote food security amid devastating floods and global supply chain disruptions, according to a statement by the Manila-based lender on Friday (Oct 21). The financing will be the single largest inflow since the nation received US$1.1 billion bailout loan in August from the International Monetary Fund.
The South Asian nation is looking for new loans and debt relief from friendly countries after floods submerged nearly a third of the country and left US$40 billion in damages. Pakistan's credit rating was cut deeper into junk by Moody's Investors Service after the floods, citing increased risks to debt sustainability.
The nation's US dollar bonds are trading at distressed levels, and the rupee dropped to nearly a record low last month. The country replaced its finance minister last month to deal with the economic crisis.
The loan will help boost the nation's US dollar reserves that stand at the lowest level in three years and cover about one month of imports, lower than the three-month standard benchmark. BLOOMBERG