The Government of Pakistan has signed a $1 billion financing agreement with the Asian Development Bank (ADB), marking the country’s re-entry into the Middle Eastern financial markets after a gap of over three years.

The multi-tranche facility, formalised in Islamabad on Tuesday, will span five years and includes both Islamic and conventional financing. According to the Ministry of Finance, the agreement reflects growing global confidence in Pakistan’s ongoing economic reforms and fiscal management strategies.

The deal, partially backed by ADB’s policy-based guarantee, is structured to attract support from a consortium of financial institutions. These include Dubai Islamic Bank, Standard Chartered, Abu Dhabi Bank, Sharjah Islamic Bank, Ajman Bank, and Habib Bank Limited (HBL).

Officials stated that 89 percent of the agreement comprises Islamic financing, while the remaining 11 percent is conventional. The financial facility is intended to support Pakistan’s budgetary needs and enhance its liquidity amid challenging macroeconomic conditions.

Finance Ministry officials said the ADB’s involvement has played a critical role in enabling Pakistan to regain investor confidence in global financial markets.

“This is not merely a financing agreement—it’s a manifestation of international trust in Pakistan’s economic trajectory,” an official remarked.

This development also signals a significant shift in Pakistan’s external borrowing strategy, with renewed emphasis on engaging Middle Eastern banks under both Islamic and conventional instruments.

Analysts believe the agreement could ease short-term fiscal pressure and help unlock further multilateral support. It also aligns with the government’s broader policy framework aimed at achieving macroeconomic stability, boosting foreign reserves, and restoring investor confidence.