Pakistan has received $500 million from Asian Infrastructure Investment Bank, the Finance Ministry wrote on Twitter on Tuesday, adding that the funds will be deposited with the central bank and augment foreign exchange reserves.

The development comes after the AIIB signed a $500 million loan agreement with Pakistan to support the Building Resilience with Countercyclical Expenditures (BRACE) Program at COP27.

“By creating fiscal space for crucial health and social sector spending, BRACE will strengthen Pakistan’s macroeconomic management and support more sustained and inclusive growth. BRACE is also supporting Pakistan’s response to and recovery from the adverse impacts of the combined exogenous shocks including supply chain disruptions, soaring energy prices, and climate-induced devastating floods,” the bank said in a statement on November 22.

The agreement was signed by AIIB Vice President, Investment Operations (Region 2) Konstantin Limitovskiy and Finance Ministry Special Secretary Awais Manzur Sumra.

AIIB’s financing for BRACE was approved under the bank’s Covid-19 Crisis Recovery Facility. The programme would provide “critical countercyclical financing support to Pakistan to implement priority measures to build the resilience of vulnerable groups, strengthen social protection, increase food security and support economic revitalization”.

“It is essential that we proactively and flexibly address our Members’ urgent needs in the face of multiple challenges,” Limitovskiy said.

“We look forward to enhancing our partnership with Pakistan and collaborating with global partners to significantly increase our support to help Members’ efforts in achieving a green, resilient and inclusive recovery. AIIB is dedicated to promoting regional cooperation in addressing development challenges in an integrated way.”

The AIIB has approved nine projects totaling $2.21 billion for Pakistan, covering economic resilience and the energy, water and transport sectors. This support to the BRACE Program is the third loan approved under AIIB’s CRF to Pakistan, boosting the total amount under the CRF to $1.25 billion.