Pakistan Secures $800 Million Finance Programme from ADB
The ADB loan and guarantee aim to bolster Pakistan’s fiscal reforms, even as India flags concerns over potential misuse.
After securing a $1.4 billion Resilience and Sustainability Facility (RSF) from the International Monetary Fund (IMF) in May, Pakistan has now received approval for an $800 million programme from the Asian Development Bank (ADB) aimed at enhancing fiscal sustainability and public financial management.
Titled the Improved Resource Mobilization and Utilization Reform Program (Subprogram 2), the package includes a policy-based loan of $300 million and ADB’s first-ever policy-based guarantee of up to $500 million. The guarantee is expected to help Pakistan mobilize up to $1 billion in additional financing from commercial banks.
According to reports, in the wake of the April 22 Pahalgam terror attack, India raised concerns with the ADB, warning that Pakistan could potentially misuse international funds.
Despite these concerns, the ADB cited progress. “Pakistan has made significant progress in improving macroeconomic conditions,” said Emma Fan, ADB Country Director for Pakistan. “This program backs the government’s commitment to further policy and institutional reforms that will strengthen public finances and promote sustainable growth.”
The programme supports wide-ranging reforms in tax policy and administration, compliance, public expenditure, and cash management. It also promotes digitalization, investment facilitation, and private sector development. The goal is to reduce Pakistan’s fiscal deficit and public debt while expanding fiscal space for social and development spending.
The reform package is supported by technical assistance and coordination with other development partners, aiming to help Pakistan build long-term fiscal resilience.
Since 1966, the ADB has committed over $52 billion to Pakistan through public and private sector loans, grants, and other financial support to boost inclusive growth, infrastructure, energy, food security, transport, and social services.