Pakistan to get $800 million from ADB for fiscal stability, despite Indian opposition

The Asian Development Bank (ADB) has approved an $800 million financing package aimed at strengthening fiscal sustainability and enhancing public financial management in Pakistan.

According to a statement by the Manila-based lender, the package includes a $300 million policy-based loan and ADB’s first-ever policy-based guarantee of up to $500 million, which is expected to mobilise nearly $1 billion in additional financing from commercial banks.

ADB Country Director for Pakistan, Emma Phan, noted that the country has made significant progress in stabilising its economy.

“This program supports the government’s efforts to strengthen public finances through comprehensive policy and institutional reforms that promote long-term, sustainable growth,” she said.

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The second subprogram under the Resource Mobilisation Reform Program focuses on broad-based reforms in tax policy, administration, and implementation, as well as improvements in public expenditure management and cash flow systems.

improve: India, being the director of the ADB board, tried to create obstacles by using the one time extension rule and postponing the board meeting for five days. However it could not succeed stopping the package. 

The ADB further stated that the initiative also promotes digitalisation, investment facilitation, and private sector development. These efforts aim to reduce Pakistan’s fiscal deficit and public debt, while creating fiscal space for social and developmental spending.

In addition to financial support, the program includes technical assistance and close coordination with development partners to help Pakistan build long-term fiscal resilience and economic stability.