The Asian Development Bank (ADB) has approved $300 million policy-based loan to help strengthen Pakistan’s finance sector by supporting measures to develop competitive capital markets and encourage private sector investment in the country’s industries.

“Capital markets act as a major catalyst in transforming the economy into a more efficient, innovative, and competitive marketplace”, said ADB Senior Project Officer Sana Masood in a statement.

Currently, Pakistan’s capital markets play a limited role in financial intermediation and resource mobilisation. The Pakistan Stock Exchange (PSE) needs expansion in terms of the number of investors and the number of companies raising capital.

“The reforms proposed under this programme will lower the cost of financial intermediation and facilitate private sector investment to generate sustainable growth and job opportunities. It will also mitigate the negative impact of capital market instability on the economy and help to diversify Pakistan’s financial system”.

“Institutional strengthening of the debt management office will develop the government bond market on a sustainable basis”, said ADB Principal Financial Sector Specialist Syed Ali-Mumtaz H. Shah. “Establishing a special tribunal for capital market-related cases would significantly enhance investor confidence in the equity market.”

ADB has supported the development of Pakistan’s financial markets through three policy-based loans over the past two decades. The Third Capital Market Development Programme will augment the size and capacity of capital markets and support reforms that enhance the institutional and regulatory capacity of relevant government bodies.

It will also diversify the investor base, develop important market infrastructure such as surveillance systems, and improve the supply of alternative financial instruments. Additionally, the programme will help the government to strengthen its debt management proficiency.

The government and ADB have agreed to anchor the programme to the design of a long-term national capital market master plan to build strong government ownership and coordination across the agencies. ADB will also provide an $800,000 technical assistance to support the implementation of key reform actions under the programme.

Meanwhile, Chairman CPEC Authority Lt. Gen (Retd) Asim Saleem Bajwa has said that a number of companies from the Gulf region were interested to establish industrial units in the Gwadar Free Zone.

“There has been a lot of progress on free zone in the city that spanned over an area of 2400 acres where not only local and Chinese investors but those from Gulf area were also keen to set up their industries”, he said in his recent interview with a Youtube channel.

News Network International