Asian Development Bank guarantee helps Pakistan secure $1 billion commercial financing package: report

The Asian Development Bank has helped Pakistan secure $1 billion in commercial financing through a guarantee-backed structure tied to fiscal reform measures, it said in its latest “Partnership Report 2025: Partnerships for Scale and Impact”. 

The ADB said it approved an $800 million financing package for Pakistan in June 2025 under the Economic Transformation Agenda extending through 2028. The package included a $300 million policy-based loan and a $500 million policy-based guarantee.

According to the report, the guarantee enabled Pakistan to mobilise $1 billion in private and commercial financing while obtaining longer repayment tenors and improved borrowing terms.

Dubai Islamic Bank and Standard Chartered Bank acted as joint mandated lead arrangers for the syndicated financing facility involving seven international commercial banks.

The report noted that Islamic financing constituted the majority of the facility.

The ADB said the support comes as Pakistan continues to face challenges including weak tax collection, mounting debt pressures and dependence on external financing.

Pakistan’s tax-to-GDP ratio remained at 9.5% in 2024, significantly below regional averages, according to the report.

The reform programme focuses on improving revenue mobilisation, strengthening public expenditure management, reducing debt vulnerabilities and encouraging private investment.

As part of the programme, Pakistan established a Tax Policy Office to separate tax policy from tax administration and expanded digital tax filing and compliance systems.

The report said reforms were also underway in public financial management through expansion of the Treasury Single Account and the establishment of a cash forecasting mechanism to improve liquidity management.

According to the ADB, Pakistan has also strengthened its Debt Management Office to improve debt transparency and risk management.

Additional reforms under the programme include measures related to the Pakistan Single Window initiative, digital economy taxation, retail savings infrastructure and climate financing.