Pakistan Proposes $500 Million ADB Loan to Reform Public Sector Pension System
ISLAMABAD, Pakistan – March 15, 2026Pakistan has proposed a new $500 million (approximately Rs 140 billion) loan from the Asian Development Bank (ADB) to overhaul its public sector pension system, officials at the Ministry of Finance confirmed on Saturday.The programme, titled “Transforming Public Sector Pension Program”, aims to ease the mounting fiscal pressure on the…
ISLAMABAD, Pakistan – March 15, 2026
Pakistan has proposed a new $500 million (approximately Rs 140 billion) loan from the Asian Development Bank (ADB) to overhaul its public sector pension system, officials at the Ministry of Finance confirmed on Saturday.
The programme, titled “Transforming Public Sector Pension Program”, aims to ease the mounting fiscal pressure on the federal budget caused by rapidly rising pension liabilities. Pakistan’s annual pension bill has already surged to Rs 1,055 billion, making reforms urgent for long-term financial sustainability.
According to finance ministry sources, the loan will support structural changes, including a gradual shift from the existing defined-benefit scheme to a more transparent and contribution-based defined-contribution model. It will also strengthen institutional capacity, introduce modern IT-based account management systems, improve governance, monitoring and reporting, and enhance stakeholder engagement and financial literacy.
“These reforms are essential to control pension expenditures and reduce the future burden on the exchequer,” a senior ministry official said, speaking on condition of anonymity.
The proposed funding will come from ADB’s ordinary capital resources. The project is currently at the proposal stage and forms part of Islamabad’s broader efforts to modernise public finance management amid ongoing economic challenges.
The Asian Development Bank has been actively supporting Pakistan’s pension modernisation through technical assistance, including capacity building for the federal pension agency.
This latest initiative comes as the government continues structural reforms to break the cycle of fiscal instability and improve transparency in public spending
