The Asian Development Bank (ADB) has released its latest economic outlook for Pakistan, maintaining earlier projections for both economic growth and inflation, while also unveiling a major $800 million support package to boost the country’s financial sustainability.
Key Forecasts Remain Unchanged
In its Asian Development Outlook report issued Wednesday, the ADB kept Pakistan’s GDP growth forecast at 3% for the current fiscal year 2025, unchanged from its previous projection in April. This figure falls short of the federal government’s growth target of 4.2%, signaling a more cautious stance from the regional lender.
Similarly, ADB maintained its inflation forecast at 5.8%, remaining below the government’s average inflation target of 7.5% for the fiscal year. The report underscores that while there are signs of improvement, the pace of recovery is expected to remain modest given the domestic and global economic challenges.
$800 Million Program Announced
In a parallel development, ADB also approved a substantial $800 million financing program for Pakistan. The package includes:
$300 million policy-based loan under the second phase of a broader reform initiative.
A policy-based guarantee of up to $500 million, marking ADB’s first such guarantee for Pakistan. This guarantee is expected to unlock around $1 billion in commercial financing from private banks.
According to ADB’s Country Director for Pakistan, Emma Fan, the initiative is designed to strengthen Pakistan’s fiscal management and promote sustainable economic reforms.
Reforms and Policy Focus
The ADB program aims to enhance public financial management by:
Reforming tax policy and administration
Strengthening government expenditure control
Improving cash management systems
Reducing fiscal deficits and public debt
Encouraging digital transformation and private sector growth
The program also provides a full technical assistance package, along with coordination support from development partners, to help Pakistan move toward long-term financial stability.
Official Endorsement and Broader Context
Khurram Shehzad, Adviser to the Finance Minister, confirmed the approval of the package on social media, crediting the Ministries of Finance and Economic Affairs for securing strong backing from ADB’s board.
The announcement follows Pakistan’s renewed plea during ADB’s annual meeting, where officials, including Dr. Niaz, urged the lender to scale up its support in light of rising debt, climate vulnerabilities, and fiscal constraints. He emphasized that while Pakistan continues on the path of reforms, it needs sustained international backing to overcome economic instability and pursue development goals.
