Loan deals worth $603m inked between govt and Islamic Development Bank
ISLAMABAD: The government of Pakistan and the Islamic Development Bank (IsDB) signed three loan agreements worth about USD603 million to finance the M-6 Sukkur-Hyderabad Motorway Project, Poverty Graduation of Extremely Poor and Flood Affected Households Project (PGEP), and the Out-of-School Children project for the Azad Jammu and Kashmir.
The agreements were formalised in Islamabad following high-level talks between Pakistan’s Minister for Economic Affairs, Ahad Khan Cheema, and an IsDB delegation, led by the Vice President of IsDB, Dr Rami Ahmad.
The project agreements were officially signed by the Vice President of the Islamic Development Bank (IsDB), Dr Rami Ahmad and the Secretary of the Economic Affairs Division, Muhammad Humair Karim.
The ceremony was witnessed by the Federal Minister for Economic Affairs, Ahad Khan Cheema, the Federal Minister for Poverty Alleviation and Social Safety, Syed Imran Ahmad Shah, along with other senior government officials.
Under the agreements, IsDB will provide financing of USD475 million for the M-6 Sukkur–Hyderabad Motorway, a key link to the proposed Peshawar-Karachi Motorway. Pakistan also signed an agreement with IsDB to launch the Poverty Graduation of Extremely Poor and Flood Affected Households (PGEP) project, a landmark initiative aimed at transitioning ultra-poor households from dependency on cash assistance to sustainable livelihoods, resilience, and economic self-reliance. PGEP has a total outlay of $134.2 million, of which IsDB will contribute USD 118.4 million.
The Project will be implemented in 25 districts (20 districts selected based on Multidimensional Poverty Index (MPI 2024) and 5 most flood-affected districts of the 2022 and 2025 floods. The project aims to reach 160,866 households and create 100,000 employment opportunities through integrated asset transfers, interest-free loans, skills development, rainwater harvesting, climate-smart agriculture, and business service providers’ interventions. The PGEP reflects the Government’s commitment to shifting from consumption-based safety nets to graduation-focused, resilience-driven development, aligned with national priorities and the Sustainable Development Goals (SDGs).
Furthermore, for the Out-of-School Children project of Azad Jammu and Kashmir, IsDB will provide USD10 million, which would help bring about 60,000 out-of-school children back into classrooms, besides supporting the training for 4,000 teachers.
The IsDB Vice-President expressed that IsDB was keen on further expanding cooperation with Pakistan in the areas of mutual interest. The Minister for Economic Affairs acknowledged and appreciated the continued IsDB support for Pakistan.
Copyright Business Recorder, 2026
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