Pakistan approves $750m ADB borrowing for pension and PPP reforms

The government has approved borrowing $750 million, equivalent to Rs209 billion, from the Asian Development Bank (ADB) for pension reforms and a public-private partnership (PPP) programme, as Pakistan’s total debt and liabilities approach Rs100 trillion.

The proposed loans include $500 million, or Rs139 billion, for pension reforms and $250 million, or Rs70 billion, for promoting sustainable public-private partnerships. The approvals were granted by a concept clearance committee headed by Deputy Chairman Planning Commission Ahsan Iqbal, according to officials familiar with the meeting.

The borrowing is still at the approval stage. The government is negotiating the loans with the Manila-based ADB and will finalise procedural details following the issuance of the committee’s formal minutes.

What the pension loan is for

The $500 million pension programme aims to strengthen fiscal sustainability, governance, administration and service delivery in the federal pension system.

Its objectives include reducing existing pension liabilities, operationalising a defined contribution pension scheme and improving employee engagement.

The Finance Ministry told the committee that rising pension expenditure and long-term liabilities were reducing fiscal space for spending on health, education, infrastructure, climate resilience and social protection. In plain terms, the pension bill is crowding out other spending, and the government wants the loan to help restructure the system so that it costs less over time.

The committee asked the ministry to submit a report detailing the outcomes achieved under an earlier pension reforms project. The Planning Commission had sought details of previous loans taken for pension reforms, which the Finance Ministry said it would provide later.

Ahsan Iqbal directed that tangible outcomes from the earlier project be linked with the objectives of the new programme. The message is clear: a new loan should not simply repeat an old one without showing what the old one achieved.

What the PPP loan is for

The committee also approved a $250 million loan to strengthen the legal and institutional framework for public-private partnerships at the federal level. The programme aims to improve public investment management and public financial management.

Of the proposed loan, $200 million will be provided through relatively expensive financing, while the remaining $50 million will carry concessional rates. That mix matters, because expensive financing adds to the debt burden even as it funds reform.

The government had previously borrowed another $250 million for establishing the legal framework, policies and institutional capacity for PPPs, including amendments to the Public Private Partnership Act, 2017. The Planning Commission recommended an impact assessment of the earlier loan and sought a larger share of concessional financing.

The debt backdrop

The Finance Ministry said approximately 50 percent of Pakistan’s ADB portfolio is financed through relatively expensive lending, while available concessional financing has already been allocated to other projects. Increasing the concessional share of the proposed loan would affect financing available for those projects.

According to the State Bank of Pakistan, the country’s total debt and liabilities reached nearly Rs100 trillion in June 2026, including Rs86.7 trillion in public debt. Public debt stood at 68.3 percent of GDP, exceeding the sustainable limit prescribed under the Fiscal Responsibility and Debt Limitation Act.

Pakistan’s gross financing requirements are estimated at more than 20 percent of GDP, according to the Finance Ministry’s annual borrowing plan.

Why the Planning Commission’s questions matter

The most important part of this story may not be the $750 million figure itself, but the questions the Planning Commission asked before approving it.

For the pension loan, it wants a report on the outcomes of the earlier project. For the PPP loan, it wants an impact assessment of the earlier $250 million and a larger concessional share.

What the loans could change

What happens next

The government will negotiate the loans with the ADB and finalise procedural details after the committee’s formal minutes are issued. The Finance Ministry is expected to provide the reports on earlier pension and PPP projects that the committee requested.

Those reports will be the first test of whether the new borrowing is genuinely tied to past performance, or whether the questions asked in the meeting fade once the loans are signed.

How is the $750m split?

A total of $500 million is for pension reforms and $250 million is for the public-private partnership programme.

How large is Pakistan’s debt?

Total debt and liabilities reached nearly Rs100 trillion in June 2026, including Rs86.7 trillion in public debt, equal to 68.3 percent of GDP.

What did the Planning Commission ask for?

• ProPakistani, “Pakistan Borrows $750 Million Loan for Pension and PPP Reforms” (27 October 2026): https://propakistani.pk/2026/10/27/pakistan-borrows-750-million-loan-for-pension-and-ppp-reforms/