The government has approved borrowing $750 million, equivalent to Rs. 209 billion, from the Asian Development Bank (ADB) for pension reforms and a public private partnership (PPP) program, as Pakistan’s total debt and liabilities approach Rs. 100 trillion.
The proposed loans include $500 million, or Rs. 139 billion, for pension reforms and $250 million, or Rs. 70 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.
Pension Reforms Loan Targets Rising Liabilities
The $500 million pension program aims to strengthen fiscal sustainability, governance, administration and service delivery in the federal pension system. Its objectives include reducing existing pension liabilities, operationalizing 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. The committee asked the ministry to submit a report detailing the outcomes achieved under an earlier pension reforms project.
Planning Commission Seeks Results From Previous Loans
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 program.
He also called for fiscal stabilization achieved through borrowed budget support to help increase funding for the Public Sector Development Program and support sustainable economic growth and job creation.
$250 Million Loan Approved for PPP Program
The committee also approved a $250 million loan to strengthen the legal and institutional framework for public private partnerships at the federal level. The program 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.
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.
Pakistan’s Public Debt Nears Rs. 100 Trillion
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 Rs. 100 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. The government is negotiating the loans with the Manila based ADB and will finalize procedural details following the issuance of the committee’s formal minutes.
The post Pakistan Borrows $750 Million Loan for Pension and PPP Reforms appeared first on ProPakistani.
