Includes $300 Million Policy-Based Loan and $500 Million Program-Based Guarantee
The Asian Development Bank (ADB) has approved a financial assistance package worth $800 million for Pakistan under the Resource Mobilization Reform Program (Subprogram-II).
According to the Ministry of Finance, the package comprises a $300 million policy-based loan (PBL) and a $500 million program-based guarantee (PBG).
This approval is the outcome of coordinated diplomatic efforts by Pakistan’s Ministry of Economic Affairs and Ministry of Finance.
Officials explained that the package aims to strengthen domestic resource mobilization and stabilize Pakistan’s economy through key financial reforms. The support is expected to enhance the tax system, boost revenue collection, and promote fiscal discipline.
The program also intends to broaden Pakistan’s revenue base, marking a critical step toward achieving economic self-reliance.
As outlined in the Asian Development Outlook Annual Report 2025, Pakistan’s real GDP is projected to grow by 2.5% in the fiscal year 2025, maintaining the same growth rate as in FY2024. The ADB anticipates growth to rise to 3.0% in FY2026.
Emma Fan, ADB Country Director for Pakistan, commented, “Pakistan’s economy has benefitted from improved macroeconomic stability through robust reform implementation in areas such as tax policy and energy sector viability. Growth is expected to continue in 2025 and accelerate in 2026. Sustained policy reforms are essential to support this growth and strengthen fiscal and external buffers.”
Earlier, the ADB delayed the approval of the $800 million package by five days following a request from India to review the loan documents. This incident highlighted gaps in the lender’s rules, which allow such extensions.
The board meeting was rescheduled to June 3, officials added.
Economic Affairs Secretary Dr. Kazim Niaz confirmed the postponement and explained that ADB rules permit any executive director to request a one-time extension, which India utilized. The ADB country office declined to comment on the matter.
India’s move came after failing to block the approval of a $1 billion second loan tranche by the International Monetary Fund (IMF), reflecting its ongoing lobbying against Pakistan’s economic interests.
Despite the delay, Pakistan’s external financing plans remain on track, with funds expected to be credited to the central bank following board approval on June 3.
Tensions between India and Pakistan escalated on April 22 after a deadly attack in the Pahalgam area of Indian-Illegally Occupied Jammu and Kashmir (IIOJK), which killed 26 people. India accused Pakistan without presenting evidence; Pakistan denied involvement and called for an impartial investigation.
Subsequently, India suspended the 65-year-old Indus Waters Treaty, canceled visas, and closed border crossings, leading to reciprocal measures by Pakistan.
Military hostilities intensified with missile strikes on May 7 targeting cities in Punjab and Azad Jammu and Kashmir, followed by Pakistan shooting down Indian warplanes. Both nations conducted airstrikes on military installations and strategic targets.
By May 10, diplomatic efforts led by the United States resulted in a ceasefire agreement, although both countries continue to engage in a narrative conflict.
