PTBP Web Desk
The Asian Development Bank (ADB) has given the green light to an $800 million program aimed at strengthening fiscal sustainability and improving public financial management. The decision, announced on Tuesday, reflects international confidence in Pakistan’s ongoing economic reforms and its commitment to restoring macroeconomic balance.
According to the ADB’s official statement, the initiative—named the Improved Resource Mobilization and Utilization Reform Program, Subprogram 2—comprises two key financial components. First, it includes a $300 million policy-based loan to support reforms already underway. Second, it features ADB’s first-ever policy-based guarantee of up to $500 million, a move that is expected to unlock as much as $1 billion in commercial bank financing for Pakistan.
The program supports a broad range of institutional and policy reforms. It is designed to help Pakistan strengthen its tax policy, administration, and compliance systems, while also improving how the government manages its public expenditures and cash flow.
“The program aims to reduce Pakistan’s fiscal deficit and public debt, while freeing up resources for critical social welfare and development programs,” the ADB stated. The reforms also focus on advancing digitalisation, promoting investment facilitation, and encouraging private sector development, which are all vital components for sustained economic growth.
ADB’s Country Director for Pakistan, Emma Fan, emphasized that the initiative represents continued support for the government’s reform agenda. “Pakistan has made significant progress in improving macroeconomic conditions,” she said. “This program backs the government’s commitment to further policy and institutional reforms that will strengthen public finances and promote sustainable growth.”
The ADB’s financial support is not limited to funding. The program is backed by a comprehensive assistance package, which includes technical assistance, capacity building, and coordination with other international development partners. These supplementary efforts are designed to ensure that Pakistan not only receives financial backing but also the necessary tools and expertise to execute long-term reforms effectively.
The policy-based guarantee mechanism introduced in this program marks a significant innovation for the ADB. It is expected to attract private capital and reduce borrowing costs for Pakistan by lowering risk premiums associated with commercial lending.
The Pakistani government has welcomed ADB’s decision, calling it a diplomatic and economic success. Khurram Schehzad, Adviser to the Finance Minister, credited the Ministry of Finance and the Ministry of Economic Affairs for securing majority support at the ADB Board.
Taking to X (formerly Twitter), Schehzad wrote: “Diplomacy led by Economic Affairs and Ministry of Finance secures majority support at ADB Board.” He noted that the achievement demonstrates effective economic diplomacy and reinforces international confidence in Pakistan’s fiscal roadmap.
This program is aligned with the country’s broader macroeconomic stabilization efforts, particularly in the context of its engagements with the International Monetary Fund (IMF) and other multilateral institutions. It comes at a time when Pakistan is trying to bolster its foreign exchange reserves, manage its debt burden, and maintain investor confidence amid global economic uncertainties.
