Macroeconomic improvement: Fiscal discipline, policy reforms will be crucial for Pakistan: ADB

ISLAMABAD: Continued efforts toward fiscal consolidation and policy reforms will be the key to improvements in Pakistan’s macroeconomic recovery and stability, particularly broadening the tax base; reforming state-owned enterprises and improving the business environment, says Asian Development Bank (ADB).

The bank in its report, “Asian Development Bank and Pakistan: Fact Sheet” stated political transition, security issues, structural risks, the devastating impact of the 2022 floods, and adverse external shocks continue to pose major economic challenges to Pakistan.

Political uncertainties compounded with legal and institutional factors weigh on project readiness and overall smooth project implementation. Cumbersome land acquisition procedures, procurement delays, currency devaluation, and price fluctuations are affecting the project outcomes. However, regular tripartite portfolio review meetings among ADB, the government, and executing agencies have helped tackle some of the project implementation issues, it added.

ADB projects Pakistan’s GDP growth at 2.5%, inflation at 6%

The report further recommended that reforms are required to promote high value-added exports, expand social spending, reinforce the energy sector’s governance and sustainability, and implement structural reforms that will strengthen institutions and create jobs.

The ADB will be preparing the country partnership strategy for Pakistan for 2026–30, which will identify key challenges and development requirements, support the government in implementing key structural reforms, and boost economic resilience through a robust pipeline of public-private projects and private sector development. The future pipeline is expected to focus on mitigating the impacts of climate change, investing in the social sector, and developing climate-smart economic infrastructure. The ADB will also explore the use of digital technology to boost inclusive growth, expand opportunities, and improve government services. The ADB investments in the private sector will continue to help businesses unlock investments, build a culture of entrepreneurship, and contribute to sustainable development.

As of 31 December 2023, the ADB has committed 755 public sector loans, grants, and technical assistance totaling $41.4 billion to Pakistan. The ADB’s current sovereign portfolio in Pakistan includes 55 loans and four grants worth $10.11 billion. Cumulative sovereign and non-sovereign loan and grant disbursements to Pakistan amount to $31.76 billion.

These were financed by regular and concessional ordinary capital resources, the Asian Development Fund, and other special funds.

In 2023, the ADB’s loan and grant commitments to Pakistan amounted to $1.6 billion. This includes $400 million in programme lending, $1.2 billion from project lending, and $13.5 million from grants.

Total outstanding balances and undisbursed commitments of the ADB’s non-sovereign transactions in Pakistan as of 31 December 2023 amounted to $229.46 million representing 1.94 percent of ADB’s total private sector portfolio.

The report noted that cumulative co-financing commitments in Pakistan include; sovereign co-financing: $5.14 billion for 56 investment projects and $112 million for 68 technical assistance projects since 1973, non-sovereign co-financing $13.89 billion for 23 investment projects since 1993.

Copyright Business Recorder, 2025