Pakistan and ADB

ADB's Work in Pakistan

Pakistan was a founding member of ADB in 1966. ADB has since committed over $36.31 billion to promote inclusive economic growth and improve the country’s infrastructure, energy and food security, transport networks, and social services.

Aligned with the Government of Pakistan’s development vision, ADB’s new country partnership strategy, 2021–2025 focuses on three priorities: improving economic management, building resilience, and boosting competitiveness and private sector development.

The Faisal Mosque on the foothills of Margalla Hills in Islamabad, Pakistan

Since 1966, ADB has committed $34.36 billion in sovereign loans, $150.5 million in grants, $1.01 billion in nonsovereign financing, $203.7 million in technical assistance projects, and $591 million in ADB-administered cofinancing for Pakistan.

ADB provided significant and rapid support to Pakistan’s coronavirus disease (COVID-19) pandemic response. This included a $500 million loan under the bank’s COVID-19 Active Response and Expenditure Support Program to help the government deliver social protection programs. The funds were channeled through the government’s flagship poverty alleviation program, Ehsaas, to expand health sector capabilities and deliver fiscal stimulus to boost economic growth and create jobs. ADB also approved $2 million from its Asia Pacific Disaster Response Fund and $3 million through regional technical assistance to help Pakistan purchase personal protective equipment and other emergency medical supplies. The bank and the Swiss Agency for Development Cooperation cofinanced $1 million to train 4,500 doctors and paramedical staff in COVID-19 critical care.

ADB committed $300 million in emergency assistance and $5 million from Norway to strengthen Pakistan’s public health system and help meet the basic needs of the poor and vulnerable. The bank also reallocated $30 million from the National Disaster Risk Management Project to support the country’s pandemic response, while the National Disaster Risk Management Fund allocated an additional $20 million from interest earned.

Responding rapidly to the COVID-19 situation in Pakistan, ADB is providing much-needed medical supplies and equipment to medical facilities and health workers on the frontline.

In other measures, ADB provided a $300 million policy-based loan to strengthen Pakistan’s finance sector, develop competitive capital markets, and encourage private sector investment. The bank also committed a $300 million policy-based loan to help promote macroeconomic stability by improving trade competitiveness and diversifying exports.

In Punjab, ADB signed an agreement to provide $8.32 million through its Project Readiness Financing Facility. The financing will enable vital preparatory work ahead of a series of major Punjab projects to enhance water availability and increase agricultural productivity. ADB also provided technical assistance of $1.5 million to strengthen food security and post-pandemic resilience in agriculture, following an unprecedented locust infestation.

ADB provided a $15 million loan to fund the preparation of spatial master plans, detailed engineering designs, operational business plans, and ensuring readiness ahead of the Punjab urban development projects.

In June 2020, ADB and the government signed a $75 million loan for the Sindh Secondary Education Improvement Project. The project signifies ADB’s strong commitment to re-engage with Pakistan in the education sector. A number of additional education projects are planned over the next 3 years, particularly in technical and vocational education and training.

ADB raised 1.83 billion Pakistan rupees ($11.4 million) in local currency bonds. The rupees-linked offshore bond will enable ADB to extend local currency loans to boost to private sector development in Pakistan.

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments in loans and equity investments from ADB’s own funds in 2020 amounted to $1.4 billion for 38 transactions in economic and social infrastructure, finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2020, ADB mobilized $1.9 billion of long-term project cofinancing and $3.3 billion of cofinancing through its Trade and Supply Chain Finance Program and Microfinance Program. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $14.3 billion as of 31 December 2020.

Financing Partnerships

Financing partnerships enable ADB’s financing partners, governments or their agencies, multilateral financing institutions, and commercial organizations to participate in financing ADB projects. The additional funds are provided in the form of loans and grants, technical assistance, and other nonsovereign cofinancing such as B loans, risk transfer arrangements, parallel loans and equity, guarantee cofinancing, and cofinancing for transactions under ADB’s Trade and Supply Chain Finance Program and Microfinance Program.

ADB began cofinancing operations in Pakistan in 1973. Since then, sovereign cofinancing commitments for Pakistan have amounted to $4.16 billion for 50 investment projects and $101.07 million for 61 technical assistance projects. Non-sovereign cofinancing for Pakistan has amounted to $10.08 billion for 23 investment projects.

In 2020, Pakistan received a total of $1.45 billion loan cofinancing from the Agence Française de Développement, the Asian Infrastructure Investment Bank, the Green Climate Fund, the OPEC Fund for International Development and the World Bank for three investment projects; and $17.08 million grant cofinancing from the Government of Norway and the Green Climate Fund for two investment projects.

A summary of cofinanced projects is available at Pakistan: Cofinancing.

Operational Challenges

The COVID-19 pandemic continues to pose a major health care and economic challenge to Pakistan. Continued efforts toward fiscal consolidation and policy reforms will be key to sustaining improvements in macroeconomic stability, especially in broadening the tax base and improving the business environment. Furthermore, reforms are required to promote high value-added exports, expand social spending, reinforce energy sector financial and technical sustainability, and implement structural changes that will strengthen institutions and create jobs.

Future Directions

ADB will support Pakistan’s development priorities as outlined in the bank’s new country partnership strategy, 2021–2025. The strategy focuses on improving economic management, building resilience, and boosting competitiveness and private sector development. ADB’s assistance will comprise support for structural reforms and project assistance in key sectors, including energy, transport, irrigation, agriculture, urban infrastructure and services, small and medium-sized enterprises, and social development. The bank will also mobilize private financing, expand its own financing and technical assistance for public–private partnerships, and explore guarantee products to help the government leverage more financing and support capital market development.

ADB’s new Pakistan Country Partnership Strategy for Pakistan (2021-2025) will focus on restoring economic growth, enhancing resilience and people’s well-being, creating jobs, and expanding economic opportunities.

Pakistan’s growth prospects have been influenced by COVID-19 challenges. ADB’s lending will include policy support for the energy sector and capital market as well as trade and competitiveness to return the economy to a sustainable growth trajectory.