The Asian Development Bank (ADB) approved a $250 million loan, aiming to transition the funding of significant projects from public to private sectors. This comes amid Prime Minister Shehbaz Sharif’s concerns over the slow progress of privately funded initiatives.
The Manila-based lender sanctioned the first instalment of a $500 million loan, labelled “Promoting Sustainable Public-Private Partnership in Pakistan.”
According to the ADB, this policy-driven loan will enable the Pakistani government to foster sustainable investment in infrastructure and services via public-private partnerships (PPPs). It will support government policies that facilitate economically viable PPPs and enhance inclusive growth.
While the $250 million will offer temporary fiscal relief to Pakistan, it will also deepen the nation’s debt concerns. Pakistan has been securing loans to bolster its limited foreign reserves and secure budget support.
The loan has a seven-year term, and interest rates are calculated as the Secured Overnight Financing Rate plus a 75 basis points spread and additional charges, totalling around 6.5%.
This April, the government approved the $500 million loan concept under the same PPP promotion program.
The government also pledged to establish and operationalize two funds—the PDF Fund and the Viability Gap Fund—allocating annual budgetary support for their sustained functioning. The PPP Authority board has approved regulations for these funds.
Despite these measures, progress on significant PPP projects has been minimal since 2017, even with ADB’s assistance.
Recently, Prime Minister Sharif voiced his dissatisfaction with the PPP Authority’s performance, questioning the effectiveness of its leadership over the past four years.
ADB Director General for Central and West Asia, Yevgeniy Zhukov, described the loan program as a broad strategy to balance fiscal consolidation with growth objectives. It aims to foster a conducive environment for strategic, economically sound PPPs aligned with Pakistan’s development goals.
The ADB highlighted that the program supports reforms that increase the capacity of PPP investments by enhancing legal and institutional frameworks for public investment and financial management in PPPs.
Despite efforts to attract private capital for critical infrastructure sectors, success remains elusive. The State Bank of Pakistan suggests that the country needs to invest 10% of its GDP in infrastructure to bridge the gap, yet current expenditures are substantially lower.
 has sanctioned a $250 million loan aimed at shifting project financing from the public budget to the private sector in Pakistan. Discover how this loan intends to foster sustainable investments and the strategic challenges involved.){kind=link}