Islamabad (TDI): In a significant boost for Pakistan’s reform agenda, the Asian Development Bank (ADB) has greenlit an $800 million financial package under the second phase of the Resource Mobilization Reform Program.
The package consists of a $300 million policy-based loan and a $500 million program-based guarantee.
The development follows coordinated diplomatic efforts by Pakistan’s Ministry of Economic Affairs and Ministry of Finance.
The program is aimed at supporting domestic resource mobilization, enhancing fiscal management, and promoting long-term economic stability.
According to the Asian Development Outlook 2025, Pakistan’s GDP is projected to grow by 2.5% in FY2025, the same pace as the previous fiscal year.
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A further uptick to 3.0% growth is anticipated in FY2026, as macroeconomic reforms continue to take root.
“Pakistan has made steady progress in stabilizing its economy, thanks to robust reforms, especially in tax and energy sectors,” said Emma Fan, ADB’s Country Director for Pakistan.
“Continued commitment to policy reform is essential to maintain this trajectory and strengthen external and fiscal buffers.”
However, the approval process wasn’t without controversy. Last week, ADB postponed the board meeting by five days following a request from India, which sought more time to review the loan documents.
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This adjournment has pointed out the loopholes in the procedures of the ADB as it allows member countries to put in requests, even those not directly affected.
Despite the delay, government officials insisted that external financing plans for Pakistan are currently intact, with funds expected to flow into central bank reserves soon after final board approval on June 3.
This delay follows India’s failed campaign to try and block a $1 billion tranche from the International Monetary Fund in favor of Pakistan and thus demonstrates the increasing regional aspect of financial diplomacy in South Asia.
Farkhund Yousafzai is an Associate Editor at The Diplomatic Insight.
