Pakistan signs $1b financing from Asian Development Bank

ISLAMABAD: Pakistan has signed a $1 billion financing agreement with the Asian Development Bank (ADB), signaling its return to the Middle East financial markets after more than three years.

The five-year multi-purpose facility was signed in Islamabad on Tuesday and combines Islamic and conventional financing mechanisms.

The Finance Ministry said the agreement indicates the renewed confidence of the international community in Pakistan’s economic reforms and fiscal policies.

Structured with the support of ADB’s policy-based guarantee, the agreement aims to secure funds from a consortium of regional and international financial institutions. They include Dubai Islamic Bank, Standard Chartered, Abu Dhabi Bank, Sharjah Islamic Bank, Ajman Bank, and Habib Bank Limited.

About 89% of the funding will be provided through Islamic financial channels, with the remaining 11% coming from conventional sources. The funds will help strengthen Pakistan’s fiscal position and improve liquidity as the country navigates ongoing economic challenges.

According to finance officials, ADB’s involvement has been instrumental in restoring global market confidence in Pakistan. “This is more than just financial assistance – it is a strong endorsement of Pakistan’s economic direction,” an official noted.

The development also reflects a strategic shift in Pakistan’s external borrowing policy, with a focus on engaging Middle Eastern banks through a variety of financial instruments.

Economists believe the deal could ease short-term fiscal stress and open the door for additional multilateral assistance, in line with Pakistan’s broader strategy to stabilize the economy, build reserves, and reassure investors.