Pakistan plans $500 million Asian development bank loan for pension reforms

The Pakistani government is planning to secure an additional $500 million loan from the Asian Development Bank (ADB) to support reforms in the country’s pension system.

The Pakistani government is planning to secure an additional $500 million loan from the Asian Development Bank (ADB) to support reforms in the country’s pension system.

According to sources in the Ministry of Finance, the proposed loan will be equivalent to approximately Rs138.48 billion and will be obtained under a programme aimed at transforming the public sector pension system.

The Ministry of Finance has reportedly named the initiative the “Transforming Public Sector Pension Programme.” The programme is designed to address the growing financial burden of the existing pension system and introduce reforms linked to measurable outcomes.

According to ministry sources, the Asian Development Bank will also provide Rs15.92 million in technical assistance for the proposed programme.

The new programme is scheduled to begin on November 1, 2026 and is expected to be completed in November 2029.

Officials say the new loan programme will be linked to the results achieved through pension reforms. The financing is expected to be provided over the period from the current fiscal year through 2029.

According to Ministry of Finance sources, the federal government’s annual pension bill has increased to approximately Rs1.169 trillion, placing significant pressure on public finances.

The government considers the existing pension system a major financial burden on the national exchequer. The proposed reforms are therefore intended to improve the sustainability of the public sector pension system and reduce the long-term fiscal pressure associated with pension payments.

The planned ADB financing is part of broader efforts to reform Pakistan’s public-sector finances. The government is expected to implement changes under the new programme while monitoring progress against agreed reform targets.

The proposed $500 million financing and technical assistance package would provide both financial and institutional support as Pakistan moves toward restructuring its public-sector pension framework.