Pakistan approves $750 million ADB loans for pension and PPP reforms
A government committee has approved borrowing $750 million, about Rs209 billion, from the Asian Development Bank. The money is meant for federal pension reforms and a public-private partnership program.
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- $500 million is proposed for pension reforms and $250 million for public-private partnerships.
- A concept clearance committee led by Ahsan Iqbal gave the approvals.
- Terms will be finalised with the ADB after the committee's formal minutes are issued.
The government has approved borrowing a total of $750 million, equivalent to about Rs209 billion, from the Asian Development Bank (ADB). The funds are intended for pension reforms and a public-private partnership (PPP) program, according to officials familiar with the meeting.
The approvals came from a concept clearance committee headed by Planning Commission Deputy Chairman Ahsan Iqbal. Of the total, $500 million, about Rs139 billion, is proposed for pension reforms, and $250 million, about Rs70 billion, for promoting sustainable PPPs.
The pension program aims to improve fiscal sustainability, governance, administration and service delivery in the federal pension system. Its objectives include reducing existing pension liabilities, putting a defined contribution pension scheme into operation and improving employee engagement.
The Finance Ministry told the committee that rising pension spending and long-term liabilities are cutting the fiscal space available for health, education, infrastructure, climate resilience and social protection. The committee asked the ministry to submit a report on the results of an earlier pension reforms project. The Finance Ministry said it would provide details of previous pension loans later.
Ahsan Iqbal directed that tangible results from the earlier project be linked to the goals of the new program. He also said the fiscal stabilisation gained through borrowed budget support should help raise funding for the Public Sector Development Program and support economic growth and job creation.
The $250 million PPP loan is meant to strengthen the legal and institutional framework for PPPs at the federal level and improve public investment management and public financial management. Of this, $200 million would come on relatively expensive terms and $50 million at concessional rates.
The government earlier borrowed another $250 million for PPP legal framework, policies and institutional capacity, including amendments to the Public Private Partnership Act, 2017. The Planning Commission recommended an impact assessment of that loan and asked for a larger concessional share. The Finance Ministry said about 50 percent of Pakistan's ADB portfolio is financed through relatively expensive lending and that available concessional funds are already allocated to other projects.
According to the State Bank of Pakistan, total debt and liabilities reached nearly Rs100 trillion in June 2026, including Rs86.7 trillion in public debt, or 68.3 percent of GDP, above the limit set by the Fiscal Responsibility and Debt Limitation Act. The government will finalise loan terms with the Manila-based ADB after the committee's formal minutes are issued.
Why it matters
The loans add to public borrowing at a time when public debt exceeds the legal limit, and they target the federal pension system and the framework for public-private projects.
