KARACHI: Despite India’s latest attempts to obstruct Pakistan’s economic progress – mirroring its past efforts during periods of military tension and its recent unsuccessful bid to thwart Pakistan’s IMF package – the Asian Development Bank (ADB) has firmly endorsed Pakistan’s economic revival strategy.
By approving an $800 million financial assistance package under the Resource Mobilisation Reform Programme (Subprogram-II), the ADB has sent a resolute message of confidence in Pakistan’s fiscal direction and political stability under the leadership of Prime Minister Mian Muhammad Shehbaz Sharif.
India’s manoeuvring at the ADB board meeting, wherein it requested a procedural five-day delay to scrutinise the loan documentation, served merely as a symbolic and ultimately futile gesture. This act, reminiscent of New Delhi’s longstanding hostility during moments of bilateral conflict, was widely perceived as an attempt to politicise multilateral platforms to stall Islamabad’s economic progress. However, India’s recent military humiliation at the hands of Pakistan’s armed forces has evidently driven it to seek diplomatic disruption where it failed on the battlefield. Yet, the outcome reinforced a greater truth: that Pakistan’s economic diplomacy is maturing, assertive, and resilient against external antagonism.
This fresh $800 million package – comprising a $300 million policy-based loan (PBL) and a $500 million policy-based guarantee (PBG) – carries significance far beyond its monetary value. It represents a strategic enabler of Pakistan’s path towards economic stability, fiscal transparency, and international creditworthiness. Since the return of the Pakistan Muslim League (N) government in April 2022, led by Prime Minister Shehbaz Sharif, this marks the fourth major financial support initiative by the ADB. Each successive tranche of funding underscores growing trust in Pakistan’s reform agenda and the government’s capacity to implement policy overhauls that meet global benchmarks.
The success of this programme did not emerge in a vacuum. Behind the scenes, a well-coordinated diplomatic push orchestrated by the Ministry of Finance and the Economic Affairs Division worked tirelessly to secure the approval of the ADB board. According to Advisor to the Finance Minister Khurram Schehzad, the efforts yielded majority support from key stakeholders despite India’s lobbying. The result is not only a substantial financial injection but also a strategic guarantee that enables Pakistan to raise up to $1.5 billion in foreign commercial loans, thereby alleviating external financing constraints and supporting balance of payments management.
This achievement must be seen in the context of the broader macroeconomic framework shaped by the Sharif-led government. The administration has demonstrated steadfast resolve in pursuing structural reforms, particularly in tax policy and energy sector governance. The ADB, in its 2025 Asian Development Outlook, acknowledges these efforts, citing Pakistan’s improving macroeconomic indicators and projecting GDP growth to hold at 2.5% in FY2025, with an uptick to 3.0% by FY2026.
According to Emma Fan, ADB’s Country Director for Pakistan, the sustained implementation of these reforms is key to reinforcing fiscal and external buffers and continuing the current upward economic trajectory.
More than numbers, the approval signifies renewed faith in Pakistan’s fiscal sovereignty. By widening the revenue base, rationalising public expenditure, and fostering a more efficient taxation regime, the current government is setting the stage for long-term self-reliance. These reforms are not just prerequisites for international lending but essential pillars for building a resilient and inclusive economy.
A crucial aspect of the $800 million package is its focus on domestic resource mobilization -an area long overdue for reform in Pakistan. The policy-based loan aims to facilitate institutional strengthening of the Federal Board of Revenue (FBR), introduce digital tax infrastructure, and streamline compliance mechanisms. Such measures will significantly expand the tax net and reduce leakages, ultimately ensuring that economic growth translates into equitable development.
The $500 million policy-based guarantee is a masterstroke in financial engineering. In light of Pakistan’s low sovereign credit rating, this guarantee will allow access to commercial loans at far more favourable terms, thus diversifying Pakistan’s financing options beyond traditional multilateral sources. These inflows will directly support the State Bank of Pakistan’s reserves, which the government aims to boost from the current $11.4 billion to over $14 billion by the end of June. Alongside higher-than-expected remittances and the refinancing of Chinese commercial loans, the ADB-backed financing forms the cornerstone of Pakistan’s short-term external account stability.
It is also important to recognise the leadership dimension behind this accomplishment. Prime Minister Shehbaz Sharif has personally overseen the execution of key economic reforms, working hand-in-hand with Finance Minister Muhammad Aurangzeb and his economic team. The political will demonstrated by this government has not gone unnoticed by international lenders. The World Bank recently approved $108 million in funding for projects in Khyber Pakhtunkhwa, further confirming the growing alignment between Pakistan’s development goals and global institutional priorities.
Beyond the optics of approval, tangible benefits are poised to reach the grassroots. Enhanced fiscal space will allow for greater investment in critical social sectors such as health, education, and infrastructure. This financial stability will also encourage private sector confidence, boost investor sentiment, and catalyse job creation in the medium term.
Moreover, this latest approval builds upon a series of constructive engagements with multilateral institutions that are increasingly recognising Pakistan’s transition from economic vulnerability to strategic foresight. With the IMF’s second tranche of its Extended Fund Facility already in hand and the World Bank’s consistent development support, the ADB’s endorsement serves as a keystone in the arch of Pakistan’s economic resurgence.
India’s failed obstruction, though unsettling, has only further exposed the limitations of politicising multilateral forums. Pakistan’s response was dignified, rules-based, and strategically astute. Economic Affairs Secretary Dr Kazim Niaz rightly emphasised that ADB’s rules permit procedural delays, but Pakistan ensured its position was well-articulated at the highest levels. This principled stand, coupled with widespread board support, neutralised India’s mischief and underlined the credibility of Pakistan’s reform narrative.
In summary, the approval of the $800 million ADB package is a moment of vindication for Pakistan’s economic diplomacy. It is a story not merely of financial inflows but of strategic resilience, visionary leadership, and institutional maturity. Under Prime Minister Shehbaz Sharif’s stewardship, Pakistan is steadily navigating its way from crisis management to confident reform.
This episode offers a broader lesson: that Pakistan’s destiny is no longer to be written by detractors or adversaries. With robust governance, credible reform, and principled diplomacy, the nation is scripting its own economic revival – one partnership, one reform, and one milestone at a time.
