ADB approves $800M financial package for Pakistan

Express Tribune

2 days ago

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The Asian Development Bank (ADB) has approved an $800 million financial package for Pakistan under the Resource Mobilization Reform Program (Subprogram-II).
According to the Ministry of Finance, the package includes a $300m policy-based loan (PBL) and a $500m program-based guarantee (PBG).
This significant development is the result of joint diplomatic efforts by the Ministry of Economic Affairs and the Ministry of Finance.
The initiative aims to enhance domestic resource mobilization and stabilize the economy through financial reforms, ministry officials said.
They added that the support will help improve the tax system, increase revenues, and promote fiscal discipline.
The program is also expected to broaden the country's revenue base and marks a key step toward economic self-reliance.
Read ADB board meets on June 3 to approve $800m Pakistan package
According to Asian Development Outlook Annual Report 2025, Pakistan's real gross domestic product (GDP) is expected to grow by 2.5% in the fiscal year 2025, maintaining the same growth rate as in FY2024.
ADB projects that Pakistan's growth will increase to 3.0% in FY20.
'Pakistan's economy has benefitted from improved macroeconomic stability through robust reform implementation in areas such as tax policy and energy sector viability,' said ADB Country Director for Pakistan Emma Fan.
'Growth is projected to persist in 2025 and to increase in 2026. Sustained implementation of policy reforms is vital to buttress this growth trajectory and fortify fiscal and external buffers.'
Previously, ADB had postponed the approval of a $800m financing package for Pakistan for five days on the request of India that sought time to evaluate the loan documents, exposing flaws in the lender's rule book that allows such extensions.
The meeting was rescheduled to June 3, government officials added.
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When contacted, Economic Affairs Secretary Dr Kazim Niaz confirmed that the ADB board meeting was scheduled for May 28 but has been postponed for five days on the request of the Indian executive director.
The secretary said that under the ADB rules any director can seek a one-time extension on the date and India took the benefit of this rule.
ADB country office did not respond to a request for comment on the development.
The Indian move came after it failed to block the approval of the $1 billion worth second loan tranche by the International Monetary Fund.
The postponement by ADB underscores that Pakistani representatives in the World Bank, the IMF, the Asian Infrastructure Investment Bank and the ADB will have to adopt a proactive approach to protect the country's economic interests.
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After facing defeat at the hands of the armed forces in the battlefield, India has started lobbying against Islamabad's economic interests.
The five-day postponement has not impacted Pakistan's external financing plans and the money is expected to flow in the central bank's accounts after the approval by the board on June 3rd.
Tensions between India and Pakistan escalated on April 22, after an attack in Pahalgam area of Indian-Ilegally Occupied Jammu and Kashmir (IIOJK) killed 26 people. India blamed Pakistan for the incident without providing any evidence. Islamabad denied India's claims and called for an independent probe.
India then suspended the 65-year-old Indus Waters Treaty, cancelled visas, and closing border crossings leading to tit-for-tat measures by Pakistan.
The military engagement further intensified with missile strikes on May 7 targeting several cities in Punjab and Azad Jammu and Kashmir, followed by Pakistan downing Indian warplanes.
As hostilities increased, both countries launched military strikes, with India hitting Pakistani airbases and Pakistan retaliating by damaging Indian missile storage sites and other strategic targets.
By May 10, US-led diplomatic efforts resulted in a ceasefire agreement, though both countries continue to engage in a war of narratives.