India Convinces ADB to Delay $800 Million Loan Package for Pakistan

The Asian Development Bank (ADB) has delayed a $800 million financing package for Pakistan by five days on India’s request. The board meeting, initially scheduled for May 28, will now take place on June 3. ADB rules allow any board member to seek a one-time delay, which India did, reported Express Tribune. The delay follows India’s failed attempt to block a $1 billion IMF tranche to Pakistan. The financing includes a $300 million policy loan and a $500 million guarantee to secure up to $1.5 billion in foreign commercial loans. The loan is the second tranche under ADB’s Resource Mobilization Program. The $500 million guarantee is critical due to Pakistan’s low credit rating, which remains at B- despite a recent Fitch upgrade. The postponement has not affected Pakistan’s external financing plans. The government expects to raise over $1 billion in commercial loans backed by the ADB guarantee. Pakistan has budgeted $3.8 billion in foreign commercial loans for FY24, though actual disbursements remain low due to the credit rating. The ADB will charge a nominal fee for the guarantee, which is not for development projects but to support reserves.