In a key development, the Asian Development Bank (ADB) on Tuesday approved an $800 million program to strengthen fiscal sustainability and improve public financial management in Pakistan.
The Improved Resource Mobilization and Utilization Reform Program, Subprogram 2, includes a policy-based loan of $300 million and ADB’s first-ever policy-based guarantee of up to $500 million, which is expected to mobilise financing of up to $1 billion from commercial banks, ADB said in a statement.
“Pakistan has made significant progress in improving macroeconomic conditions,” said ADB Country Director for Pakistan Emma Fan. “This program backs the government’s commitment to further policy and institutional reforms that will strengthen public finances and promote sustainable growth.”
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The multilateral lender said that the program supports far-reaching reforms to improve tax policy, administration, and compliance, while enhancing public expenditure and cash management. It also promotes digitalisation, investment facilitation, and private sector development.
“These measures aim to reduce Pakistan’s fiscal deficit and public debt, while creating space for social and development spending. The program is underpinned by a comprehensive support package—including technical assistance and close coordination with development partners—designed to help Pakistan build long-term fiscal resilience and stability,” the Manila-based lender stated.
Adviser to the Finance Minister Khurram Schehzad termed the approval a diplomatic success led by the Ministry of Finance and the Ministry of of Economic Affairs.
“Diplomacy led by Economic Affairs and Ministry of Finance secures majority support at ADB Board,” Schehzad wrote on X.
Earlier in April, ADB revised Pakistan’s GDP growth forecast for the fiscal year 2025 down to 2.5%, while saying that the country’s outlook depends largely on the success of ongoing economic reform.
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