The Asian Development Bank (ADB) has approved a $250 million policy-based loan aimed at assisting the government of Pakistan in driving sustainable investments in infrastructure and services via public-private partnerships (PPPs). This initiative is a significant step towards fostering an environment conducive to strategic and fiscally affordable PPPs, ultimately promoting inclusive economic growth in Pakistan.
The ADB’s “Promoting Sustainable Public-Private Partnerships Program” supports the implementation of government policies designed to create an enabling environment for PPPs. These partnerships are seen as crucial for balancing Pakistan’s fiscal consolidation and growth objectives. ADB Director General for Central and West Asia, Yevgeniy Zhukov, emphasized the importance of this program, stating, “This program is part of our comprehensive and integrated package of public sector management support that balances the country’s fiscal consolidation and growth objectives. It will help the government of Pakistan create an environment conducive to strategic, fiscally affordable PPPs that will bring the country closer to its development goals.”
The program aims to support reforms that will enhance the absorptive capacity of PPP infrastructure investments. This will be achieved by creating a more robust and integrated legal and institutional framework for public investment management and public financial management specific to PPPs. By strengthening these frameworks, the program ensures that infrastructure planning is efficient and that development practices are sustainable.
One of the key components of the program is the implementation of an integrated PPP policy. This policy is designed to facilitate efficient infrastructure planning, promote sustainable development practices, and ensure that projects are subjected to climate risk screening and gender considerations in their feasibility assessments and contracts.
ADB Economist Sana Masood highlighted the significance of mobilizing private finance through PPPs to bridge the financing gap in public sector infrastructure projects. “Mobilizing private finance through PPPs can help to bridge the financing gap in public sector infrastructure projects—which is vital,” said Masood. “This program will help ensure PPPs in Pakistan are structured correctly and implemented effectively to deliver more efficiency, innovation, and value for money.”
In addition to the $250 million loan, the ADB has also allocated a $700,000 technical assistance grant to support the program’s preparation and implementation. This grant aims to enhance the technical and institutional capacities necessary for the effective execution of PPP projects. Furthermore, in December 2023, an additional $950,000 was approved to support PPP pipeline identification, capacity building, and sector strategy development. These funds are critical for building the necessary infrastructure and institutional capabilities to manage and sustain PPP projects effectively.
The ADB’s initiative is expected to have a profound impact on Pakistan’s development goals. By promoting the use of PPPs, the program aims to address the country’s infrastructure deficits, enhance public service delivery, and stimulate economic growth. The strategic use of PPPs will enable Pakistan to leverage private sector efficiencies, innovation, and capital to meet its infrastructure needs.
The reforms supported by the ADB program will also ensure that PPP projects are environmentally sustainable and socially inclusive. By incorporating climate risk screening and gender considerations into project planning and implementation, the program aims to create infrastructure that is resilient and beneficial to all segments of society.
