ISLAMABAD: The Asian Development Bank (ADB) on Tuesday approved an $800 million programme loan for Pakistan to help strengthen fiscal sustainability and improve public financial management.

The Improved Resource Mobilisation and Utilisation Reform Programme, (Subprogram 2) includes a policy-based loan of $300m, and ADB’s first-ever policy-based guarantee of up to $500m, which is expected to mobilise financing of up to $1 billion from commercial banks, the Manila-based lending agency said in a statement.

“Pakistan has made significant progress in improving macroeconomic conditions,” said ADB Country Director for Pakistan Emma Fan. “This programme backs the government’s commitment to further policy and institutional reforms that will strengthen public finances and promote sustainable growth.”

The programme 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 programme 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.

In a recent policy note, the ADB observed that political uncertainties, security issues and external shocks continue to threaten Pakistan’s moderate economic recovery. Structural and institutional factors, as well as issues such as cumbersome land acquisition procedures, procurement delays, a lack of counterpart funds, and currency and price fluctuations, affect project readiness, implementation, and outcomes.

Continued fiscal consolidation and policy reforms are key to improving Pakistan’s macroeconomic recovery and stability. Particularly important are efforts aimed at broadening the tax base; reforming state-owned enterprises; improving health, education and climate resilience; and improving private sector engagement, the lender noted.

Published in Dawn, June 4th, 2025