Pakistan Secures $330 Million Loan from ADB for Social Protection Program

Islamabad, December 15: The Pakistani government has successfully entered into a loan agreement with the Asian Development Bank (ADB) for USD 330 million to support the Integrated Social Protection Development Programme (ISPDP), as reported by Dawn on Sunday.

The loan agreement was signed by Economic Affairs Secretary Kazim Niaz and ADB’s Country Director Emma Fan. During the ceremony, Niaz underscored the importance of this additional funding in strengthening institutional capacity and improving access to essential services such as education and healthcare. He also expressed his appreciation for ADB’s continuous support in these areas.

In her address, Fan reiterated ADB’s commitment to helping Pakistan enhance its social safety nets. She emphasized that this funding would be pivotal in promoting inclusive growth, reducing poverty, improving skills development, and expanding healthcare services for vulnerable populations.

This new loan agreement comes at a time when Pakistan faces challenges in securing funding from other international lenders. The World Bank, for instance, recently cancelled a budget support loan of over USD 500 million to Pakistan after the country failed to meet key conditions on time, including revising power purchase agreements under the China-Pakistan Economic Corridor (CPEC). The cancellation of the World Bank loan, which was part of the Affordable and Clean Energy program (PACE-II), could hinder the Pakistani government’s expectations of receiving new loans.

The World Bank had initially agreed to provide USD 500 million, later increasing the amount to USD 600 million to help bridge Pakistan’s external financing gap. However, the second tranche of funding was contingent upon negotiations with Independent Power Producers (IPPs), particularly those involved in CPEC. Pakistani authorities confirmed that no progress had been made in renegotiating agreements with Chinese power plants, a situation complicated by China’s refusal to reopen the deals.

With the cancellation of the World Bank loan, Pakistan’s financing options have become even more critical as it looks to manage its external debt obligations and sustain its economic recovery.