In a major financial boost, the Asian Development Bank (ADB) has approved an $800 million package to support Pakistan’s economic reform efforts. The “Improved Resource Mobilization and Utilization Reform Program (Subprogram 2)” aims to improve fiscal sustainability, strengthen public financial management, and drive long-term economic resilience.
The package includes a $300 million policy-based loan and ADB’s first-ever policy-based guarantee of up to $500 million. This guarantee is expected to attract up to $1 billion in commercial financing, offering Pakistan greater access to capital for development. ADB said the program will help the country strengthen tax systems, improve public spending, and promote digitalisation and private sector growth.
ADB Country Director for Pakistan Emma Fan praised Pakistan’s progress on macroeconomic reforms and said the new program will help deepen these efforts. The reforms aim to reduce the fiscal deficit and debt burden, while ensuring more funds are available for social services and development programs. She added that the plan is backed by technical assistance and strong coordination with other development partners.
The government welcomed the ADB’s decision, calling it a diplomatic win. Adviser to the Finance Minister Khurram Schehzad credited the Ministry of Finance and the Ministry of Economic Affairs for securing board-level support. He noted on X (formerly Twitter) that Pakistan’s proactive diplomacy was key in achieving this milestone.
Despite this progress, challenges remain. ADB recently revised Pakistan’s GDP growth forecast for FY2025 down to 2.5%, warning that future outlook depends heavily on the success of current reforms. Still, with this new financial backing, Pakistan is expected to gain much-needed fiscal space to pursue deeper structural changes and promote sustainable growth.