ADB Approves $800 Million Program to Bolster Pakistan’s Fiscal Management

The Asian Development Bank (ADB) has sanctioned an $800 million initiative aimed at enhancing fiscal stability and refining public financial management practices in Pakistan. This decision was announced on Tuesday.

The “Improved Resource Mobilization and Utilization Reform Program, Subprogram 2” features a $300 million policy-based loan. It also introduces ADB’s inaugural policy-based guarantee, potentially reaching $500 million. This is projected to unlock up to $1 billion in funding from commercial banks, according to an official statement from ADB.

“Pakistan has demonstrated considerable advancement in strengthening its macroeconomic environment,” noted Emma Fan, ADB Country Director for Pakistan. “This program reinforces the government’s dedication to pursuing policy and institutional reforms that will fortify public finances and encourage sustainable economic expansion.”

The financial institution emphasized that the program facilitates significant reforms designed to refine tax policies, streamline administration, improve compliance, and optimize public expenditure and cash flow management. Furthermore, it encourages digitalization, simplifies investment procedures, and boosts private sector growth.

“These actions are intended to narrow Pakistan’s fiscal gap and reduce public debt, thus freeing up resources for social programs and developmental projects. The program is supported by a robust assistance framework, including technical support and close partnerships with development organizations, to aid Pakistan in establishing lasting fiscal strength and stability,” the Manila-based lender articulated.

Khurram Schehzad, Advisor to the Finance Minister, hailed the approval as a diplomatic triumph spearheaded by the Ministry of Finance and the Ministry of Economic Affairs.

“Economic Affairs and the Ministry of Finance’s diplomacy ensures widespread support at the ADB Board,” Schehzad shared on X.

Previously, in April, ADB adjusted Pakistan’s GDP growth forecast for the fiscal year 2025 downward to 2.5%, while emphasizing that the nation’s prospects are heavily reliant on the effective implementation of ongoing economic reforms.