Business Recorder
ISLAMABAD: In a major boost for Pakistan’s fragile economy, the Asian Development Bank (ADB) has helped the country unlock USD 1 billion in commercial financing through an unprecedented guarantee structure tied to sweeping fiscal reforms. This was noted in the Bank’s report “The Partnership Report 2025: Partnerships for Scale and Impact”, which highlighted how ADB and its partners worked together in 2025 to deliver practical solutions across Asia and the Pacific, reduce and manage risks, and scale up development outcomes on the ground. The support comes at a time when Pakistan is struggling to break out of a recurring cycle of economic crises, weak tax collection, mounting debt pressures, and chronic dependence on external bailouts. The ADB approved a USD 800 million financing package in June 2025, including a USD 300 million policy-based loan and a USD 500 million policy-based guarantee under Pakistan’s Economic Transformation Agenda, extending through 2028. According to the ADB, the guarantee enabled Pakistan to mobilise USD 1 billion in private and commercial financing while securing longer repayment tenors and more favourable borrowing terms. The Dubai Islamic Bank and the Standard Chartered Bank acted as joint mandated lead arrangers for the syndicated financing facility, which included seven international commercial banks. The Islamic financing component accounted for the majority of the facility. Pakistan’s tax-to-GDP ratio remained at only 9.5 percent in 2024, significantly below regional averages, limiting the government’s ability to fund development projects and social spending. The reform programme focuses on improving revenue mobilisation, strengthening public expenditure management, reducing debt vulnerabilities, and encouraging private investment. As part of the reforms, Pakistan has established a Tax Policy Office to separate tax policy from tax administration and expanded digital tax filing and compliance systems to improve transparency and revenue collection. The ADB said reforms in public financial management are also underway through the expansion of the Treasury Single Account and establishment of a cash forecasting mechanism to improve liquidity management. The Debt Management Office has also been strengthened to improve debt transparency and risk management. In addition, the programme includes measures to facilitate trade and investment through the Pakistan Single Window initiative as well as reforms related to digital economy taxation, retail savings infrastructure, and climate financing. “The ADB’s innovative use of policy-based guarantees to mobilise private capital has been effective in supporting Pakistan in implementing public fiscal reforms that would lay the groundwork for more resilient, sustainable, and investment-driven growth,” said Sana Masood, Senior Public Sector Specialist at ADB. She added that the programme had helped Pakistan re-enter global commercial lending markets and attract strong interest from regional lenders on improved terms. Copyright Business Recorder, 2026
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