ADB, Pakistan sign $1.54bn loan deal

December 22, 2021: The government of Pakistan and the Asian Development Bank (ADB) on Wednesday signed a $1.54 billion loan and grant agreement to improve energy, transport, irrigation, and urban sectors in Pakistan, said a press release.

“The projects signed today mark ADB’s strong commitment for Pakistan’s post-pandemic recovery and sustainable development. Pakistan and ADB will continue working together to improve economic management, build resilience, boost competitiveness and private sector development,” said Yong Ye, ADB’s Country Director for Pakistan.

Under the $300 million policy-based loan for the energy sector, ADB is supporting technical, and governance reforms to strengthen Pakistan’s energy sector and its financial sustainability. The financing is part of the second subprogram of ADB’s Energy Sector Reforms and Financial Sustainability Program, which aims to reduce and manage the accumulated cash shortfall across the power supply chain known as circular debt.

ADB will provide a $235 million loan to upgrade222-kilometer Shikarpur–Rajanpur section of the National Highway 55 from two lanes to a four-lane carriageway. The N55 is part of the Central Asia Regional Economic Cooperation (CAREC) Corridor 5 which links the ports of Karachi and Gwadar in southern Pakistan with national and international economic centers to the north. The project will improve operations along with the network and enhance the capacity of the National Highway Authority.

The $650 million financings will help improve the livability of five cities in Pakistan’s Khyber Pakhtunkhwa (KP) province by upgrading urban infrastructure and expanding access to reliable services. The project consists of a $380 million ADB loan and a $5 million grant with a co-financing of $200 million loan by the Asian Infrastructure Investment Bank to improve water supply and sanitation in the cities of Abbottabad, Kohat, Mardan, Mingora, and Peshawar, by enhancing water supply systems and sewerage networks benefitting up to 3.5 million people

ADB will also provide $15 million under the Second Project Readiness Financing (PRF-2) for Khyber Pakhtunkhwa Cities Improvement ? to plan and design three ensuing loan in the next three years to provide sustainable urban services and mobility across multiple cities in the province, following a systematic approach to planning, higher quality of project readiness, and increased focus on institutional capacities for sustainable project operations.

ADB will provide $5 million ‘project readiness financing’ for the Kurram Tangi Integrated Water Resources Development Project. The facility will ensure high-quality design, stakeholder engagement, and safeguards readiness of the ensuing project for timely approval and cost-effective implementation.

ADB is committed to achieving a prosperous, inclusive, resilient, and sustainable Asia and the Pacific while sustaining its efforts to eradicate extreme poverty. Established in 1966, it is owned by 68 members—49 from the region.

The $603 million results-based lending program aims to expand social protection programs in Pakistan through conditional cash transfers. The program will support the implementation of Ehsaas, Pakistan’s national social protection and poverty reduction strategy. Under the Integrated Social Protection Development Program, ADB will provide a regular loan of $600 million and a $3 million grant from the Asian Development Fund and will administer a $24 million grant from the Education Above All Foundation.

Pakistan is a founding member of ADB. Since 1966, ADB has committed more than $36.31 billion to promote inclusive economic growth and improve the country’s infrastructure, energy and food security, transport networks, and urban and social services.

Press Release