ADB proposes technical assistance package for Pakistan

ISLAMABAD: The Asian Development Bank (ADB) has proposed a technical assistance package for Pakistan, citing persistent governance failures, weak public financial management, regulatory uncertainty and institutional capacity gaps as major impediments to private investment, fiscal efficiency and economic competitiveness.

The proposed assistance of USD 750,000 comes as Pakistan continues to grapple with a narrow tax base, rigid expenditures, weak budget controls, limited transparency and fragmented institutional oversight—problems that the ADB says are undermining the country’s ability to mobilise revenue, manage public spending and create a predictable environment for private-sector-led growth.

According to the ADB project documents, the proposed “Supporting Public Sector Reform and Institutional Capacity in Pakistan” facility will provide flexible, demand-driven support for diagnostics, policy advice, project preparation and capacity building at both federal and provincial levels.

The ADB’s assessment paints a particularly challenging picture of Pakistan’s institutional landscape, pointing to complex regulations, weak enforcement, fragmented oversight and limited transparency in areas including budgeting, procurement and oversight of state-owned enterprises.

Judicial delays and weak enforcement, it added, continue to erode trust and raise the cost of doing business.

The bank has also identified serious weaknesses in Pakistan’s public financial management system, including a narrow tax base, rigid expenditure structures, weak budgetary controls and low transparency.

The situation is considered more acute at the provincial level, particularly in Balochistan, where outdated systems and capacity constraints are hampering effective public financial management.

Under the proposed technical assistance, the ADB will undertake targeted diagnostic assessments and provide policy recommendations covering public financial management, governance, the investment climate, trade and logistics.

The facility will also strengthen due diligence and operational readiness for upcoming ADB-financed projects through technical, financial, safeguards and gender-related assessments.

Another major component will focus on building institutional capacity through training, knowledge products and stakeholder engagement to improve coordination and implementation capability across federal and provincial governments.

The proposed assistance will support key pipeline and ongoing initiatives, including strengthening federal public financial management, enhancing PFM in Balochistan, and developing the Trade and Logistics for Private Sector Competitiveness in Pakistan Project.

ADB has separately highlighted weaknesses in Pakistan’s trade and logistics ecosystem, including inadequate infrastructure, poor coordination and heavy reliance on road transport, which it says are restricting competitiveness and export growth.

The investment climate is also being held back by regulatory unpredictability, limited access to finance, infrastructure gaps and the government’s large economic footprint, according to the bank.

The USD 750,000 assistance, to be financed through the ADB’s Technical Assistance Special Fund, is aligned with SDG 16.6 on effective, accountable and transparent institutions and SDG 17.1 on strengthening domestic resource mobilisation.

The proposed intervention is also aligned with the Prime Minister’s Economic Transformation Agenda, particularly its goals of stimulating private investment, promoting export-led growth and strengthening public finances.

It directly supports the ADB’s Pakistan Country Partnership Strategy 2026-2030, especially Strategic Priority 1—Private Sector Enablement—which places emphasis on governance, PFM, investment climate reforms and trade and logistics.

Although the assistance will not directly target poor households, ADB expects indirect poverty and social benefits from stronger institutions, improved resource management and reforms aimed at enabling private-sector-led growth. The bank noted that institutional weaknesses can have a disproportionate impact on poorer populations by limiting resource mobilisation, service delivery and inclusive growth. The programme will consequently incorporate poverty, social and gender considerations into project preparation and assess potential distributional impacts.

The ADB said risks arising from uneven institutional readiness and capacity constraints would be addressed through phased capacity development, stakeholder engagement and alignment with government priorities and ongoing reforms.

Copyright Business Recorder, 2026