KARACHI: The Asian Development Bank (ADB) on Tuesday approved an $800 million financing package for Pakistan to help the country improve fiscal sustainability, strengthen public financial management and support economic reforms.

The funding, part of the Improved Resource Mobilization and Utilization Reform Program (Subprogram 2), includes a $300 million policy-based loan and ADB’s first-ever policy-based guarantee of up to $500 million, which is expected to help Pakistan raise as much as $1 billion from commercial banks.

“Pakistan has made significant progress in improving macroeconomic conditions,” ADB’s Country Director for Pakistan, Emma Fan, said in a statement. “This program backs the government’s commitment to further policy and institutional reforms that will strengthen public finances and promote sustainable growth.”

The program supports reforms to tax policy, administration and compliance, along with improvements in public expenditure management, cash handling and digitalization.

It also aims to facilitate investment and private sector development, with the broader goal of reducing Pakistan’s fiscal deficit and public debt while creating space for development and social spending.

Khurram Schehzad, adviser to Pakistan’s finance minister, also confirmed the development in a social media post, saying “diplomacy” led by the finance ministry and economic affairs division had helped secure majority support at ADB Board.

The ADB said the program is backed by a comprehensive support package involving technical assistance and coordination with development partners to help Pakistan build long-term fiscal resilience.

A founding member of ADB, Pakistan has received more than $52 billion in public and private sector financing from the bank since 1966, spanning infrastructure, energy, transport, food security and social services.

ADB plays a leading role in supporting inclusive and sustainable development across Asia and the Pacific.