The Asian Development Bank has proposed a $750,000 technical assistance package for Pakistan, warning that persistent governance weaknesses, poor public financial management and regulatory uncertainty are holding back private investment and economic competitiveness.
The proposed Supporting Public Sector Reform and Institutional Capacity in Pakistan program will provide policy advice, diagnostic assessments, project preparation and capacity building for federal and provincial governments.
The ADB identified a narrow tax base, rigid government expenditures, fragile budget controls, limited transparency and fragmented institutional oversight as major weaknesses in Pakistan’s public financial management system. The bank also pointed to complex regulations, fragile enforcement and institutional capacity gaps that are making it harder for businesses to operate in a predictable environment. Judicial delays and weak enforcement, it stated, continue to undermine trust and increase the cost of doing business.
The challenges are particularly pronounced at the provincial level, including in Balochistan, where outdated systems and limited institutional capacity are restricting effective public financial management.
Under the proposed assistance, the ADB will conduct targeted assessments and provide recommendations covering public financial management, governance, the investment climate, trade and logistics. The program will also backing due diligence and operational preparation for upcoming ADB financed projects.
What happened
A separate component will focus on strengthening government capacity through training, knowledge products and stakeholder engagement. The aim is to improve coordination and implementation across federal and provincial institutions.
The assistance will support initiatives including reforms to federal public financial management, improvements in public financial management in Balochistan and the proposed Trade and Logistics for Private Sector Competitiveness in Pakistan Project.
The ADB has also identified weaknesses in Pakistan’s trade and logistics system, including inadequate infrastructure, poor coordination and heavy dependence on road transport. These problems, it stated, are limiting export growth and overall competitiveness.
Pakistan’s investment climate is also being constrained by regulatory uncertainty, limited access to financing, infrastructure gaps and the administration’s large economic footprint, according to the bank.
The details
The $750,000 package will be financed through the ADB’s Technical Assistance Special Fund and is aligned with the bank’s Pakistan Country Partnership Strategy for 2026 to 2030. The strategy places particular emphasis on enabling private sector investment through governance reforms, stronger public financial management and improvements in trade and logistics.
The ADB said the assistance is additionally aligned with the government’s Economic Transformation Agenda, particularly its objectives of attracting private investment, promoting export led expansion and strengthening public finances. While the program is not directly targeted at poor households, the bank expects stronger institutions and better public resource management to generate indirect social and poverty reduction benefits.
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