BEIJING – Given the serious impact of the Covid-19 outbreak and the fallout of the locust disaster, Pakistan should seek emergency loan from Asian Infrastructure Investment Bank (AIIB). The AIIB had announced launch of a new Crisis Recovery Facility earlier this month to support its members in the battle against the Covid-19 pandemic, China Economic Net (CEN) reported on Monday.
The initial offering of the loan is said to stand at $5billion, and the AIIB’s Board of Directors has approved a sovereign-backed loan of 85 million Yuan (about $355 million equivalent) to China.
“Pakistan should also seize the opportunity and apply for the loan,” CEN said.
According to AIIB, the facility could support emergency public health needs, such as health infrastructure for emergency preparedness and clients whose infrastructure investments are severely impacted by the pandemic.
It could also provide the financing needed to preserve the productive capacity of other productive sectors, including manufacturing that have been hit by Covid-19.
The facility is designed to be flexible and adaptive to emerging demands. It will offer dedicated financing for the next 18 months for the projects within its membership. The size of the loan could be increased depending on client’s demand.
AIIB is also exploring how it can use its Project Preparation Special Fund to help its members, especially low-income members, whose economies are being particularly impacted by Covid-19.
The loan approved to China on April 3, was the first tranche of the project, which aims to strengthen public health emergency response capacity in the Chinese municipalities of Beijing and Chongqing, including sustainable public health infrastructure, emergency equipment and supplies. Finance Ministry of China applied for the loan with a term of 34.5 years. It holds the advantages of low interest, long maturity, and convenient for utilization.
Jin Liqun, AIIB President and Chair of the Board said, “the international community needs to come together to pool our resources to help the world navigate the current pandemic and economic upheaval. AIIB is committed to playing its full part.” “AIIB will do its part to rapidly respond to the financing needs of its members and clients in close partnership with other international development institutions.
I believe this new facility will help our clients to overcome immediate financial pressures and maintain critical long-term investments that otherwise may not be possible,” Jin added.
The AIIB is a multilateral development bank with a mission to improve social and economic outcomes in Asia. Headquartered in Beijing, it began operations in January 2016 and has now grown to 102 approved members worldwide. So far, the AIIB has approved 68 loan projects for 21 members, with a total loan amount of US $13.45 billion; it has approved 11 projects under the Project Preparation Special Fund with a total amount of US $16.07 million. In addition, there are 30 projects proposed by members in the project library.
Pakistan has obtained loans for 4 projects in total, including Tarbela 5 Hydropower Extension and National Motorway M-4 (Shorkot-Khanewal Section) approved in 2016, Karachi Water and Sewerage Services Improvement and Karachi Bus Rapid Transit in 2019.
In addition, there are two more proposed projects, and one of which Lahore Water and Wastewater Management Project has been approved under the Project Preparation Special Fund. There is a department under the Economic Affairs Division engaging with the AIIB to deal with the application for loan.
Given the serious impact of the new coronavirus epidemic and the fallout of locust disaster in Pakistan, China Economic Net suggests Pakistan to consider favorably the application for the Crisis Recovery Facility from AIIB.