Pakistan to get USD 800 million ‘financial booster’ from ADB

The Asian Development Bank (ADB) on Tuesday approved an USD 800 million programme to strengthen Pakistan’s fiscal sustainability, which includes a policy-based loan of USD 300 million.

The remaining amount is a guarantee of up to USD 500 million, which is expected to mobilise financing of up to USD 1 billion from commercial banks.

The main aim of the financial booster is to reduce Pakistan’s “fiscal deficit and public debt”, while creating space for social and development spending.

Previously, ADB had postponed the approval of the USD 800 million financing package for Pakistan for five days on the request of India that sought time to evaluate the loan documents. The meeting was then rescheduled to June 3.

As per ADB, the financial programme supports far-reaching reforms to improve tax policy, administration, and compliance, while enhancing public expenditure and cash management. It also promotes digitisation, investment facilitation, and private sector development.

Pakistan’s economy is navigating a complex landscape marked by modest growth forecasts, fiscal constraints, and rising geopolitical tensions.

According to Asian Development Outlook Annual Report 2025, Pakistan’s real GDP is expected to grow by 2.5 per cent in the fiscal year 2025, maintaining the same growth rate as in FY2024.

“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.

Earlier on May 10, the International Monetary Fund (IMF) had approved the first review of Pakistan’s economic reform program under Extended Fund Facility (EFF), enabling a disbursement of approximately USD 1 billion.

India, however, firmly opposed providing funds to a country that continues to sponsor cross-border terrorism, warning that such support carries reputational risks for global institutions and undermines international norms.