LAHORE: Leveraging financial and technical assistance from international development partners to deal with economic, environmental and social challenges, the Punjab government has projected some $668 million (Rs185.94bn) foreign-funded component in the budget for the fiscal 2026-27.

The foreign-funded component comprises some $496.8m foreign-funded development projects and $171.2m foreign-funded programmes.

The Punjab government has World Bank and Asian Development Bank-assisted projects as well as projects funded by development partners like Danish International Development Agency (DANIDA), French Development Agency (AFD), International Fund for Agriculture Development (IFAD) and Asian Infrastructure Investment Bank (AIIB).The budget document states that the foreign engagement in Punjab’s development financing primarily takes two forms i.e. project-based loans and grants (Foreign Project Assistance) and programme-based loans (budgetary support).

The loans obtained from multilateral donor agencies through the federal government for specific foreign-assisted development projects are called Foreign Project Assistance, while the programme-based loans provide direct budgetary support, linked with indicators and results, named Disbursement Linked Indicators and Result-Based Lending.

The government states that the province prioritizes loans that finance tangible asset creation over soft interventions.

In line with its policy parameters on foreign borrowing, the Punjab government is believed to be guided by a preference for concessional financing and longer maturities, ensuring long-term fiscal sustainability.

Giving a breakdown of foreign-funded programmes for financial year 2026–27, the budget document states the World Bank is injecting $439.3m; ADB $105.2 million and IFAD $8.0 million.

In the foreign-funded development projects component, the budget document states the French Development Agency is supporting $55 million projects; Asian Infrastructure Investment $10 million and DANIDA $50 million.

SECTORAL ALLOCATION: The budget document states the highest expected cash inflows are to be received in LG&CD sector amounting to $170m (Rs49.5bn), followed by urban development $112.5 million (Rs32.6bn), governance & IT $61m (Rs17.7bn). The agriculture sector is expected to get $57m (Rs16.5bn), education $30.8m (Rs8.9bn), irrigation $24m (Rs7bn), skills development $15m (Rs4.3bn), regional planning $13.3m (Rs3.8bn), population welfare $8.4m (Rs2.4bn) and health sector $3.3m (Rs0.957bn).

The budget document explained the World Bank assisted projects as Punjab Clean Air Programme; Getting Results: Action, Delivery of Quality Education Services (GRADES); Punjab Rural Sustainable Water Supply & Sanitation Project (PRSWSSP); Punjab Resilient and Inclusive Agriculture Transformation Project (PRIAT); Punjab Urban Land Systems Enhancement (PULSE) Project-PMU BOR; Punjab Family Planning Program (PFPP); Punjab Affordable Housing Programme (PAHP); National Health Support Programme; Punjab Inclusive Cities Programme (PICP) and System Transformation Grant.

The ADB-assisted projects are: Construction of Jalalpur Irrigation Project; Punjab Nursing & Health Workforce Reforms Programme; Punjab Intermediate Cities Improvement Investment Programme; Project Readiness Financing (PRF) for Punjab Water Resources Management; Improving Workforce Readiness in Punjab Project; Developing Resilient Environment and Advancing Municipal Services (DREAMS) in Punjab; Punjab Integrated Hill Torrents Management Project; Punjab Low Carbon Agricultural Mechanisation Project and Responsive Ready and Resilient STEM Secondary Education in Punjab.

The IFAD is assisting the Southern Punjab Poverty Alleviation Project (SPPAP)-IFAD Assisted, Bahawalpur.

The AFD-funded projects are: Extension of Water Resources for Faisalabad city Phase-II; Project Management Unit for Construction of Wastewater Treatment Plant at Babu Sabu, Lahore; Heritage and Urban Regeneration in Lahore Fort; Capacity Building Project for Performance Improvement of Lahore & Faisalabad Water & Sanitation Agencies, Punjab.

The DANIDA is assisting in the construction of Eastern Waste Water Treatment Plant (33MGD) of Faisalabad City (Phase-I) and construction of Waste Water Treatment Plant at Kattar, Bund Road, Lahore.

The AIIB projects are: sewerage system from Larech Colony to Gulshan-i-Ravi; and Lahore Water and Waste Water management Project (BRBD Canal Lahore).

Published in Dawn, June 17th, 2026