Pakistan Secures $330 Million Loan from ADB as World Bank Cancels $500 Million Budget Support Loan
The government of Pakistan signed a $330 million loan agreement with the Asian Development Bank (ADB) on Saturday to support its Integrated Social Protection Development Programme (ISPDP). The agreement, aimed at enhancing Pakistan’s social safety nets and access to critical services, was signed by Economic Affairs Secretary Kazim Niaz and ADB Country Director Emma Fan, according to a report by Dawn.
During the signing ceremony, Niaz underscored the importance of the additional funding in strengthening institutional frameworks and improving public access to essential services such as education and healthcare. He expressed gratitude for ADB’s continued partnership and support in these key areas, emphasizing the critical role the funding would play in improving the quality of life for vulnerable populations.
ADB Country Director Emma Fan highlighted the institution’s commitment to Pakistan’s development goals. She noted that the additional funding under the ISPDP would significantly contribute to inclusive economic growth, poverty reduction, skill development, and the expansion of healthcare access. Fan reaffirmed ADB’s dedication to supporting Pakistan’s efforts to enhance its social safety net infrastructure and foster sustainable development.
While Pakistan celebrated the new loan agreement with ADB, the country faced a setback as the World Bank announced the cancellation of a $500 million budget support loan. The decision came after Islamabad failed to fulfill key conditions required for the disbursement of funds. These conditions reportedly included revising power purchase agreements under the China-Pakistan Economic Corridor (CPEC), a crucial infrastructure initiative between Pakistan and China.
The World Bank’s withdrawal highlights Pakistan’s ongoing challenges in meeting international financial obligations and implementing policy reforms, which are often tied to foreign aid and loans. The cancellation adds pressure to Pakistan’s already strained economy, which relies heavily on external funding to address fiscal deficits and support development initiatives.
The contrasting developments underscore the complexities of Pakistan’s economic landscape. While the ADB loan provides a lifeline for its social protection programs, the cancellation of the World Bank loan raises questions about the government’s ability to meet reform commitments. Moving forward, Pakistan will need to focus on implementing robust policy measures to ensure continued financial support from international institutions.
