The Asian Development Bank (ADB) has postponed an $800 million financing package for Pakistan by five days following a request from India, according to a report by the Express Tribune.
Originally slated for approval on May 28, the ADB board meeting will now be held on June 3. Under ADB rules, any board member can request a one-time delay, a provision India exercised after its unsuccessful attempt to block a $1 billion IMF tranche for Pakistan.
The financing package includes a $300 million policy loan and a $500 million guarantee, which will help Pakistan secure up to $1.5 billion in foreign commercial loans. This loan marks the second tranche under ADB’s Resource Mobilization Program. The $500 million guarantee is particularly crucial for Pakistan, given its low credit rating, which remains at B- despite a recent upgrade by Fitch.
Government officials have stated that the brief postponement will not impact Pakistan’s external financing plans. The government still expects to raise over $1 billion in commercial loans backed by the ADB guarantee.
Pakistan has budgeted $3.8 billion in foreign commercial loans for the current fiscal year, but actual disbursements have lagged due to the country’s credit rating. The ADB will charge a nominal fee for the guarantee, which is intended to support Pakistan’s foreign exchange reserves rather than fund development projects.
