Government Completes 19 AfDB Reforms, Program – Business

Published on March 28, 2022 9:07 p.m.

The government completes 19 reforms under the AfDB, Program

ISLAMABAD (Web Desk) – Federal Economic Affairs Minister Omar Ayub Khan said on Monday that the government has completed 19 reforms under Pakistan’s capital market development program and the Asian Development Bank ( AfDB).

According to the press release, Federal Economic Affairs Minister Omar Ayub Khan attended the signing ceremony of the Capital Market Development Program (Sub-Program 2) worth $300 million between the Division of Economic Affairs, the Government of Pakistan and the Asian Development Bank (ADB). .

The objective of the program is to strengthen market stability, improve market facilitation, improve supply-based measures and improve demand-based measures for capital market development.

It will help develop Pakistan’s capital markets, promote private investment in the country and mobilize domestic resources to finance sustainable growth.

Under the Capital Market Development Program (Sub-Program 2), Pakistan has completed 19 prior policy actions in the following areas:

In Reform Area 1, reforms are designed to promote more robust, resilient and stable capital markets. Under Sub-Program 1, amendments were made to the SECP Act 1997 to ensure structural changes in the appointment process for Commissioners and to improve operational efficiency by ensuring that the Commissioners function as a collegiate body , while the National Financial Stability Board was created to deal with cross-domain regulatory issues.

A new broker model has been introduced to strengthen the brokerage industry by reducing the likelihood of broker failure.

The new model ranks brokers based on their net worth and governance requirements, which will determine the appropriate operational risks for brokers to assume.

These reforms continued with follow-up policy actions under Sub-Program 2, such as the approval of amendments to the SECP law by the National Assembly, exemption from income tax for the SECP and the notification of a client custody regime for the brokerage sector.

In Reform Area 2, reforms will support more effective resource mobilization and allocation in the
the economy by speeding up the tendering of enforcement measures, strengthening auditing standards and improving market surveillance systems.

Financial infrastructure, including well-developed trading venues and supervisory systems that facilitate effective exchange and disclosure of information, as well as a stronger legal framework and resolution mechanisms are needed to complement the institutional environment for the development of capital markets.

Under Reform Area 3, the area focuses on increasing the depth and breadth of capital markets by promoting alternative financial instruments, including derivatives and commodity futures, as well as providing an enabling framework to enable increased access to finance by growth enterprises and state-owned enterprises.

Sub-program 2 procurement measures include facilitation and expansion of sovereign sukuk issuance; facilitate the listing of public companies on the PSX to broaden and deepen capital markets, promote the introduction of alternative asset classes, such as exchange-traded funds, options, futures and compliant products Sharia (in line with Islamic principles) and publish a framework for bonds for women entrepreneurs, the proceeds of which will help finance SMEs owned or managed by women.

Increasing the list of SOEs will also help the government address other binding constraints in running SOEs such as poor corporate governance and business performance.

Reform Area 4 measures aim to increase the size of capital markets not only by encouraging investment from institutional and retail investors, but also by strengthening the public debt market. Local currency government bond markets can be a catalyst for the development of corporate bond markets by providing a yield curve benchmark against which to price bonds, market liquidity and price disclosure.

The Minister of Economic Affairs acknowledged AfDB’s continued assistance to the Government of Pakistan.
It was further highlighted that Pakistan has recently completed various reforms under AfDB technical and financial assistance, including Trade and Competitiveness Program (USD 800), Energy Sector Reform Program Energy and Financial Sustainability ($600) and Capital Market Development Program ($600). .

The minister said the government is also committed to introducing reforms in other areas such as domestic resource mobilization, climate change and public-private partnerships.

Mobilizing domestic resources would help the government create fiscal space through better revenue collection and overcome the fiscal deficit challenge. The Minister also insisted on the use of digital tools for effective project management and monitoring. Currently, 37 AfDB-financed development projects worth $7.9 billion are being implemented across the country in the areas of energy, roads and infrastructure. transport, agriculture, urban infrastructure and the social sector.

In the current fiscal year, the AfDB has disbursed over US$1.1 billion for various development projects and programs. AfDB Country Director Mr. Yong Ye acknowledged the GoP’s efforts to complete the capital market reforms. He also discussed the AfDB’s ongoing portfolio and future interventions.

He highlighted the various issues relating to the energy sector, including the investment program for the improvement of power transmission of MFF II (tranche 3) and the Grand Thal canal irrigation project. He also indicated that the AfDB will provide support to EAD for the development of an electronic portal for efficient management of the project.

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