The Asian Development Bank (ADB) has delayed the approval of a crucial $800 million financing package for Pakistan by five days, following a request from India to allow more time for evaluating the loan documents, The Express Tribune reported.
The delay, which comes at India’s request, underscores the flexibility within the ADB’s rules that permit such extensions. Initially scheduled for May 28, the board meeting to approve the $300 million budget support loan and a $500 million guarantee for foreign commercial loans was postponed to June 3, 2025.
According to the news report, Economic Affairs Secretary Dr. Kazim Niaz confirmed the development, explaining that the ADB’s regulations allow any member country’s executive director to request a one-time extension.
This delay occurred after India failed to block the $1 billion second tranche of the International Monetary Fund (IMF) loan to Pakistan.
However, the delay has not affected Pakistan’s financing plans, as the funds are expected to be deposited in the central bank’s accounts following the rescheduled approval on June 3. Dr. Niaz also clarified that no lapse occurred on Pakistan’s part regarding the postponement and that the federal government had escalated the matter at the highest level within the ADB.
While the ADB’s management and board supported Pakistan’s position, the delay highlights how international forums can sometimes become arenas for political maneuvering.
The $800 million package, which will be used to build Pakistan’s foreign exchange reserves, has raised concerns among economic analysts. They suggest that the country should aim to reduce its dependency on foreign loans, particularly those used for budget support rather than development purposes.
Pakistan’s gross reserves currently stand at $11.4 billion, with the government aiming to increase this figure to over $14 billion by the end of June. This target is expected to be achieved through better-than-expected remittances, the $1 billion ADB-backed commercial loan, and refinancing of Chinese loans.
The ADB’s $300 million policy loan will assist the government in improving tax collection through the Federal Board of Revenue. However, critics argue that borrowing for this purpose is unnecessary given the nature of the project.
