Pakistan has approved plans to borrow $750 million from the Asian Development Bank (ADB) for federal pension reforms and a public-private partnership (PPP) programme, as the country’s total debt and liabilities approach Rs. 100 trillion.
The proposed financing includes a $500 million loan for pension reforms and $250 million for strengthening the framework for PPP projects. The approvals were granted by a concept clearance committee headed by Deputy Planning Commission Chairman Ahsan Iqbal, officials familiar with the meeting said.
Pension Loan Targets Rising Costs
The $500 million programme aims to improve the fiscal sustainability, governance and administration of the federal pension system. Its objectives include reducing pension liabilities, implementing a defined-contribution scheme and improving employee engagement.
The Finance Ministry told the committee that rising pension spending and long-term liabilities were limiting funds available for health, education, infrastructure, climate resilience and social protection.
The Planning Commission asked the ministry to report on results from an earlier pension-reform project before the new programme proceeds. Iqbal directed that measurable outcomes from the previous project be linked to the goals of the proposed loan.
He also said fiscal savings achieved through budget-support borrowing should help increase funding for the Public Sector Development Programme and support economic growth and job creation.
PPP Financing Includes Higher-Cost Funding
The committee also approved a proposed $250 million loan to strengthen the legal and institutional framework for federal PPPs and improve public investment and financial management.
Of the proposed amount, $200 million would come through relatively expensive financing, while $50 million would be offered on concessional terms.
Pakistan previously borrowed another $250 million to support the development of PPP laws, policies and institutional capacity, including amendments to the Public-Private Partnership Act, 2017. The Planning Commission called for an assessment of that programme’s impact and sought a larger concessional share in the new financing.
The Finance Ministry said about half of Pakistan’s ADB portfolio was financed through relatively expensive lending, while available concessional funds had already been allocated to other projects. Increasing the concessional share of the proposed loan could affect financing for those initiatives.
Debt Nears Rs. 100 Trillion
The State Bank of Pakistan reported that the country’s total debt and liabilities reached nearly Rs. 100 trillion in June 2026, including public debt of Rs. 86.7 trillion. Public debt stood at 68.3% of gross domestic product, above the sustainable limit set under the Fiscal Responsibility and Debt Limitation Act.
The Finance Ministry’s annual borrowing plan puts Pakistan’s gross financing requirements at more than 20% of GDP.
The government is negotiating the proposed loans with the Manila-based ADB. Procedural details are expected to be finalized after the committee issues its formal minutes.
