Pakistan and ADB

ADB's Work in Pakistan

Pakistan joined ADB as a founding member in 1966. ADB has since been working with the country to strengthen its key infrastructure, improve social services, and promote inclusive economic growth.

The bank’s country operations business plan, 2020–2022 for Pakistan outlines $7.1 billion in assistance. This includes project loans; policy-based lending for structural reforms; multitranche financing facilities for energy, transport, water, and other urban infrastructure and services; and results-based lending for energy and social services. ADB aims to mobilize private financing for development projects, expand its financing and technical assistance for public–private partnerships, and explore policy-based guarantees to help the Government of Pakistan leverage more financing and develop capital markets.

Since 1966, ADB has committed $33.5 billion in loans, $148.5 million in grants, $190.7 million in technical assistance projects, and $570.4 million in ADB-administered cofinancing for Pakistan.

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

The bank also approved a $235 million loan in 2019 to help develop an energy-efficient and climate-resilient bus rapid transit system in Karachi, Pakistan’s largest and most populated city. The system’s Red Line will extend over 26.6 km and serve more than 300,000 passengers daily. It will be the first-ever transport system in Pakistan to use biomethane produced from cattle waste as fuel for its fleet of 213 buses.

The Chashma Canal has helped transform a vast expanse of barren land into green farmland where profitable crops can be cultivated.

In October 2019, ADB approved a $75 million project to help improve the quality, accessibility, and gender responsiveness of the secondary education system in the province of Sindh.

In agriculture, ADB initiated work during 2019 on a $275 million irrigation project in Jalalpur and committed a grant of $5.1 million that will enhance technologybased agriculture in Punjab and prepare an integrated water resources project at the Kurram Tangi Dam.

The remote villages of Wagdal and Peera in Pakistan's Punjab now have electricity thanks to a clean energy system installed with ADB support.

In the energy sector, ADB maintained a strong presence with an ongoing portfolio of $2.2 billion covering energy generation, transmission, distribution, energy efficiency, and renewable energy development. In 2019, ADB committed a $300 million policy-based loan that will help the government address financial sustainability, governance, and energy infrastructure policy constraints.

To help strengthen project readiness, ADB committed two financing facilities totaling $17.3 million in 2019, one to improve cities in Khyber Pakhtunkwa and the other for water resources in Punjab.

The Flood Emergency Reconstruction and Resilience Project was successfully completed in 2019, with 1,740 km of provincial highways and district roads rehabilitated and repaired in 20 districts of Punjab affected by the 2014 floods. The project also stabilized about 800 hectares of landslide area, rehabilitated 90% of the flood protection infrastructure, constructed two new flood protection bunds along the river Jhelum, and developed safety inspection manuals for dams and flood protection infrastructure.

ADB is also actively supporting publicprivate partnership initiatives in Pakistan to support the delivery of much needed public infrastructure.

Nonsovereign Operations

As a catalyst for private investments, ADB provides financial assistance to nonsovereign projects and financial intermediaries. Total commitments from ADB’s own funds (in equity and direct loans) in 2019 amounted to $3.00 billion for 38 transactions in economic and social infrastructure, the finance sector, and agribusiness. ADB also actively mobilizes cofinancing from commercial and concessional sources. In 2019, ADB mobilized $3.28 billion of long-term cofinancing and $3.69 billion of cofinancing in trade finance, microfinance, and supply chain finance programs. Total outstanding balances and commitments of nonsovereign transactions funded by ADB’s own resources stood at $13.78 billion as of 31 December 2019.

Financing Partnerships

Financing partnerships enable ADB’s development 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 Finance Program and Supply Chain Finance Program.

ADB began cofinancing operations in Pakistan in 1973. Since then, sovereign cofinancing commitments for Pakistan have amounted to $2.69 billion for 47 investment projects and $98.55 million for 59 technical assistance projects. Nonsovereign cofinancing for Pakistan has amounted to $9.69 billion for 22 investment projects.

In 2019, Pakistan received $80 million in loan cofinancing from the Export-Import Bank of Korea for the Energy Sector Reforms and Financial Sustainability Program — Subprogram 1, and $8.5 million in grant cofinancing from the Government of Switzerland, the High-Level Technology Fund, the Japan Fund for Poverty Reduction, and the Urban Climate Change Resilience Trust Fund for three projects.

Projects Cofinanced, 1 January 2014–31 December 2018

Operational Challenges

Pakistan has been experiencing fiscal and current account deficits. Continued efforts toward fiscal consolidation will be key to sustaining improvements in macroeconomic stability. Areas for specific attention include broadening the country’s tax base, committing to policy reforms, and improving the country’s business environment. Reforms are also required to promote high value-added exports, expand social spending, progress energy sector development, and strengthen institutions.

To help improve Pakistan’s fiscal sustainability and create a better business environment, ADB will continue to engage in policy dialogue with the government on managing macroeconomic imbalances, while maintaining the momentum of structural reforms to support economic stability and expansion.

Future Directions

ADB will continue to support Pakistan through investments outlined in the country operations business plan, 2020–2022. This includes making greater use of project readiness financing as well as embracing smart technology and innovative development approaches.

Pakistan’s fast-improving transport network and its deep seaports are poised to unlock the trade potential of the landlocked Central Asian countries.

Pakistan’s growth prospects will continue to be influenced by reforms initiated by the International Monetary Fund’s stabilization program along with projects under the Central Asia Regional Economic Cooperation Program, the ChinaPakistan Economic Corridor, and other development initiatives. Program lending will include policy support for economic growth, reforms to improve the energy sector, and enhanced trade opportunities and international competitiveness.

In July 2019, the consultation process was initiated for a new country partnership strategy covering 2020–2024.