Pakistan : Preparing the Financial Market Development Program

Finance / Finance sector development

The transaction TA will support diagnostic studies, policy dialogue, and the preparation of the proposed Financial Markets Development Program. It will also help the Pakistan Government formulate a national capital market development master plan. The reforms under the program will serve to remove the binding constraints to the achievement of a vibrant capital market, such as (i) ad hoc government debt management practices and absence of a clear capital market development strategy for debt issuances; (ii) shallow and illiquid corporate bond and equity markets, and ineffective market facilitation; and (iii) fragile market stability. The TA will also explore the measures required to encourage broader participation of institutional investors in Pakistan's securities markets, and to lay the groundwork for introducing alternative financing instruments, such as derivatives, as the financial markets develop.

A central objective of the Pakistan government''s economic development strategy, as reflected in Pakistan 2025: One Nation, One Vision, is to elevate Pakistan's' status from a lower-middle-income to an upper-middle-income country by 2025. The government targeted the generation of jobs and an increase in income levels as top priorities. Achieving these objectives will require substantial investments of private and public capital to accelerate economic growth. Robust and well-functioning financial markets will help mobilize these resources, and can also meet the financing needs for housing and infrastructure, two other top priorities of the government. In collaboration with ADB, the government has implemented major financial market reforms since the late 1990s, through three sector development programs. These were effective in gradually liberalizing the financial markets and brought significant progress. The government recognizes the importance of continuing on this path and to build a strong and inclusive finance sector.

ADB's Strategy 2030 prioritizes the development of the finance sector and capital markets to encourage the participation and growth of the private sector and enhance financial stability. Private sector investment is seen as a key driver of economic growth, and its facilitation is key in Pakistan's endeavor to transform the economy into a competitive marketplace. It is also a strategic area for ADB support in the country partnership strategy, 20152019 for Pakistan.

ADB will engage a team of individual consultants to implement the TA. It is estimated that the TA will require 12 person-months of international and 7 person-months of national consultant services. The consulting team will have expertise in capital market development and facilitation across diverse technical areas (including institutional, legal and regulatory, and infrastructure aspects), and in the development of alternative financing platforms and instruments. ADB will engage the consultants following the ADB Procurement Policy (2017, as amended from time to time) and its associated project administration and/or staff instructions.

In addition to the consultants, the TA will engage resource persons to provide complementary international or national perspectives and up-to-date knowledge, and participate in and present at the workshops, seminars, or conferences. The number of resource persons and the person-months will be determined during TA implementation.