ISLAMABAD: The Asian Development Bank (ADB) on Wednesday launched its Country Partnership Strategy (CPS) 2026–2030 for Pakistan, outlining an ambitious five-year roadmap aimed at steering the country toward sustainable, inclusive, and private sector-driven economic growth.
The bank stated that Pakistan must address multiple structural constraints to shift to a sustainable and inclusive growth trajectory. Pakistan’s production and export bases are narrow, its business environment burdensome, and its public financial management imbalanced, according to the report.
The infrastructure gaps are characterised by an inefficient energy sector, insufficient investments in rail, and deficiencies in urban services. Limited provision of social services and governance weaknesses has weighed on human capital development. Poverty levels remain high.
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Pakistan is highly vulnerable to climate change and natural hazards. These interlinked constraints call for carefully sequenced reforms and well-designed investments to unlock sustained growth while enhancing inclusion and resilience, it added.
To support Pakistan in fulfilling its potential, CPS for Pakistan, 2026–2030 of ADB will focus on three interlinked priority areas: (i) private sector enablement, (ii) inclusion and empowerment, and (iii) resilience and sustainability.
The CPS priorities will be complemented by four crosscutting themes: (i) promoting good governance and strengthening institutional development, (ii) advancing gender equality and social inclusion, (iii) supporting digital transformation, and (iv) expanding regional cooperation and integration (RCI). These priorities are mutually reinforcing in advancing an export- and investment-led growth strategy, and are consistent with the corporate priorities set by ADB’s midterm review of Strategy 2030.
The CPS is aligned with Pakistan’s National Economic Transformation Plan (Uraan Pakistan), including its “5Es Framework”: (i) export promotion and diversification, (ii) ePakistan (digital transformation), (iii) environment and climate change, (iv) energy and infrastructure, and (v) equity and empowerment.
The government has emphasised that expanding private sector participation to unlock export- and investment-driven growth, while strengthening equity and social inclusion, is pivotal to achieving all these objectives. The CPS is also aligned with the strategic priorities of key development partners. ADB will add value by (i) targeting critical constraints impeding the country’s sustainable and inclusive growth; (ii) leveraging on synergies between reforms, finance, investments, and institutional development; (iii) pursuing solutions for an optimal mix of sovereign, public–private partnership (PPP), and non-sovereign support; (iv) prioritising specific sub sectors for stronger strategic focus; (v) strengthening project readiness, improving country systems, and enhancing operational quality and impacts; and (vi) coordinating with development partners and capitalizing on respective areas of comparative advantages.
ADB’s framework is built around three core pillars: enabling private sector development, advancing inclusion and empowerment, and enhancing resilience and sustainability. These pillars are supported by crosscutting priorities, including governance reforms, gender equality, digital transformation, and regional integration.
ADB Country Director Emma Fan said the strategy is designed to address Pakistan’s deep-rooted structural challenges while unlocking long-term growth potential. “The new CPS is tailored to promote robust and lasting growth that benefits the entire population, particularly the poor and vulnerable segments,” she noted, adding that the bank would support both public and private sectors in implementing critical reforms and investments.
Pakistan has stabilised its macroeconomic conditions following a series of external shocks and has initiated important structural reforms.
The CPS responds to this evolving country context by emphasising export- and investment-led growth, supported by improved public financial management, an enabling business environment, and investments in high-impact sectors.
A defining feature of the CPS is its strong emphasis on private sector-led growth. ADB plans to support regulatory reforms to reduce compliance burdens, improve the business climate, and expand access to finance— particularly for small and medium enterprises (SMEs).
The strategy also envisions scaling up public–private partnerships (PPPs), alongside increasing non-sovereign operations to directly channel financing into productive sectors.
Key areas identified for transformative investment include critical minerals, energy, transport infrastructure—especially railways— agriculture value chains, and digital connectivity.
Pakistan’s untapped mineral resources and growing digital ecosystem are seen as major drivers of future growth. However, ADB noted that outdated regulatory frameworks and infrastructure gaps have so far limited their contribution to the economy.
The CPS acknowledges that Pakistan has made notable progress in stabilising its economy. GDP growth rebounded to 3.1 percent in FY2025, inflation dropped sharply, and the current account recorded a surplus for the first time in over a decade.
These improvements have been supported by reforms under ongoing IMF programmes, including efforts to strengthen fiscal discipline, broaden the tax base, and improve governance of state-owned enterprises (SOEs).
However, ADB cautioned that structural weaknesses continue to constrain sustainable growth. The country’s narrow export base, weak tax system, inefficient energy sector, and limited access to finance remain key bottlenecks. The report highlighted that Pakistan’s tax-to-GDP ratio remains significantly below regional averages, while public sector inefficiencies and loss-making SOEs continue to pose fiscal risks.
The second pillar of the CPS focuses on inclusion and empowerment, with a strong emphasis on human capital development. ADB plans to support reforms in education and healthcare, expand vocational training, and improve employment opportunities—particularly for youth and women.
Pakistan’s demographic profile, with nearly two-thirds of its population under 30, presents both an opportunity and a challenge; without adequate investment in skills and education the country risks missing out on its demographic dividend.
Gender disparities remain a major concern. Female labour force participation stands at just 24 percent and access to education and financial services for women remains limited. ADB intends to address these gaps through targeted interventions, including expanding financial inclusion, strengthening social protection systems, and improving access to urban services.
Given Pakistan’s high vulnerability to climate change, resilience and sustainability form the third pillar of the strategy, ADB will support disaster risk management, climate adaptation, and mitigation efforts, with a particular focus on flood management and water resource systems.
The bank also aims to modernise agriculture by promoting climate-resilient practices, improving irrigation systems, and strengthening food security through better value chains and storage infrastructure.
Pakistan’s exposure to extreme weather events— including devastating floods in recent years— has underscored the urgency of climate action. ADB warned that without significant adaptation measures, climate impacts could severely affect agricultural output and economic growth.
Air quality improvement is another priority area, with plans to support policy reforms, monitoring systems, and the adoption of cleaner technologies. ADB’s strategy also prioritises energy sector reforms to address inefficiencies, reduce circular debt, and transition toward renewable energy.
Investments will target improved transmission and distribution systems, smart grid technologies, and expansion of clean energy capacity to reduce reliance on costly fuel imports.
In transport, the CPS emphasises development of a modern, multimodal network, including major upgrades to the railway system and enhanced regional connectivity through trade corridors. The CPS is aligned with Pakistan’s National Economic Transformation Plan (2024–2029) and complements ongoing efforts by international partners, including the IMF and World Bank.
ADB stressed that coordinated action among development partners would be essential to maximise impact and ensure the success of reforms.
With an active portfolio exceeding USD 10 billion, ADB remains one of Pakistan’s largest development partners.
The new strategy signals a shift toward integrated solutions combining policy reforms, financing, and technical support. As a group B developing member country, Pakistan is eligible for both regular ordinary capital resources lending and concessional ordinary capital resources lending.
ADB will maintain a cost-sharing arrangement of financing up to 90 percent of the aggregate ADB portfolio in Pakistan over the CPS period. Actual cost-sharing parameters will be determined based on project-specific considerations. ADB will emphasize government ownership and explore opportunities for increased counterpart financing, it added.
Copyright Business Recorder, 2026
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