Islamabad, 22 March 2022 (TDI): The Asian Development Bank (ADB) authorized a loan worth $300 million on Tuesday to assist Pakistan in strengthening its capital markets, encouraging private investment, and mobilizing local resources to support long-term growth.
#ADBNews: The loan will further develop Pakistan’s capital markets, promote private investment in the country, and help to mobilize domestic resources to finance sustainable growth.
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According to the news release, the ADB’s Third Capital Market Development Program’s second sub-program builds on institutional and regulatory changes implemented under the first sub-program, which was authorized in 2020.
Its goal is to stimulate institutional investor demand and expand the spectrum of alternative financial products accessible to investors, such as derivatives and commodities futures.
Director-General of ADB for Central and West Asia, Yevgeniy Zhukov, said, “For several years ADB has been Pakistan’s lead development partner in supporting the evolution of its capital markets.”
He added, “By making the country’s capital markets more robust and strengthening government debt management, this new program will also help mobilize more domestic resources which support the government’s efforts to finance sustainable growth and respond effectively to crises.”
According to the statement, Pakistan’s finance system, which is dominated by banks and lacks diversification, raises the danger of the country being unable to absorb financial shocks and periods of uncertainty. Furthermore, the Pakistan Stock Exchange (PSX) lacks depth regarding the number of investors that use it and the number of firms that raise money. In contrast, the bond market in Pakistan is virtually entirely dominated by government borrowing.
According to the ADB, the initiative aims to assist policy steps in improving market stability and encouraging foreign investment in Pakistan. The Securities and Exchange Commission of Pakistan (SECP) is undergoing structural reforms to increase governance and regulatory capabilities.
The program backs policies that strengthen the government debt market and improve market surveillance tools to simplify information sharing. It also intends to enable firms and state-owned enterprises to have easy access to capital.
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