Asian Development Bank Approves $800 Million to Boost Pakistan’s Financial Stability

The Asian Development Bank (ADB) has approved a financial package of USD 800 million to help Pakistan strengthen its financial health and improve how public funds are managed. This important news was confirmed by Khurram Schehzad, an advisor to Pakistan’s finance minister, in a brief statement shared on social media on Tuesday.

The total USD 800 million support consists of two parts:

• A USD 300 million policy-based loan (PBL)
• A USD 500 million programme-based guarantee (PBG)

This funding comes under ADB’s Resource Mobilisation Reform Programme, which is designed to support reforms that will make Pakistan’s economy stronger and more sustainable.

What Does This Financial Package Include?

The ADB clarified in a separate statement that the package is part of the second phase (subprogramme 2) of its Improved Resource Mobilisation and Utilisation Reform Programme. The USD 300 million loan is aimed at helping Pakistan implement key financial reforms. The USD 500 million guarantee is a new type of support from ADB, its first-ever policy-based guarantee, which is expected to encourage commercial banks to lend more, potentially mobilising up to USD 1 billion in additional financing.

Why Is This Important for Pakistan?

According to Emma Fan, ADB’s country director for Pakistan, the country has already made good progress in improving its economic situation. This programme supports Pakistan’s government in continuing policy and institutional reforms to:

• Strengthen public finances
• Promote sustainable economic growth

The reforms focus on important areas like:

• Improving tax policies, tax collection, and compliance
• Better management of public spending and cash flow
• Encouraging digitalisation in government services
• Making it easier for investors to invest and boosting private sector growth

Expected Benefits of the Programme

These changes aim to reduce Pakistan’s fiscal deficit (the gap between government spending and revenue) and lower public debt. This creates more room in the budget for essential social programs and development projects.

According to officials, the programme’s goal is to improve domestic resource mobilisation, meaning it will help Pakistan raise more revenue internally and reduce dependence on foreign aid. The financial reforms will make the tax system stronger, increase government revenues, and encourage better fiscal discipline across the country.

Overall, this package is seen as an important step towards making Pakistan’s economy more self-reliant and stable in the long run.