Pakistan: COVID-19 Active Response and Expenditure Support (CARES) Program

approved

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.