World Bank will contribute $20 billion to address Pakistan’s economic issues.
The World Bank has unveiled a 10-year Country Partnership Framework for Pakistan that aims to address significant socioeconomic concerns between 2026 and 2035.
Martin Reiser, World Bank Vice President for South Asia, officially inaugurated the program, providing $20 billion in cash to promote Pakistan’s development over the next decade.
The framework focuses on ambitious five- to ten-year targets such as poverty reduction, child stunting, and climate change mitigation. The key aims include promoting clean energy, improving air quality, and supporting sustainable development through public participation. The strategy also includes steps to boost private investment, jobs, and commerce.
The Bank stated in the report that while the Pakistani economy is recovering from recent crises, it remains vulnerable to a number of risks, including political instability. It acknowledged that Islamabad had implemented financial, energy, and commercial reforms with the goal of accelerating growth.
“However, there is a lack of confidence due to past failures,” the World Bank stated. Economic estimates show Pakistan’s growth trajectory, with the World Bank expecting 2.8% growth in the current fiscal year, perhaps increasing to 3.2% next year and 3.4% in 2027. Inflation is anticipated to fall steadily, from 11.1% this year to 8% by 2027.
It predicted that the tax-to-GDP ratio will reach 10.9% this year and 11.2% in 2027.
The World Bank also forecasted an increase in Pakistan’s debt commitments, with the debt-to-GDP ratio expected to reach 73.8% this year and 74.7% next year. It predicted that this percentage will climb to 75.2%.
Nonetheless, the framework acknowledges considerable limitations. Pakistan confronts significant political, governance, and macroeconomic challenges. The country’s Human Development Index remains poor, with a Human Capital Index score of only 41 out of 100.
The Bank also stated that one in every three children aged five to 16 were out of school, resulting in 25.4 million children missing school and possible economic losses of 9% by 2050 due to climate change. According to the research, the coronavirus pandemic and floods resulted in the loss of education for 2.6 million students.
According to a World Bank assessment, climate change is expected to cost Pakistan’s economy 9% of its GDP by 2050, with the state having a significant economic imprint in Pakistan. The government has more than 200 government institutions that are valued at 48% of GDP.
The World Bank stresses poverty eradication and food security and emphasises the importance of investing in social protection and human resources, recognising Pakistan’s growing population of over 240 million as a potential development opportunity.
Reiser stressed that achieving these goals of the Country Partnership Framework requires continuous hard work and a coordinated strategy between the private and public sectors over the entire 10-year period. “These goals will not be achieved in a few months or one to two years,” he stressed.
Prime Minister Shehbaz Sharif also participated in the opening ceremony of the framework, highlighting a significant milestone in Pakistan’s economic development.
Addressing the event, the PM emphasised the World Bank’s long-standing support for the country across various sectors. “The World Bank has been supporting Pakistan at different times. It has helped Pakistan in various sectors,” he remarked.
Key highlights of the partnership include:
- A 10-year Country Partnership Framework
- $20 billion investment commitment
- Focus on six key sectors, including climate change, agricultural development, and information technology
Shehbaz Sharif further emphasised the ongoing digital transformation of the Federal Board of Revenue was of utmost importance, recalling that a faceless system had been created for Karachi Port and Customs officials. He reiterated the potential for trillions of rupees in additional revenue through such systemic reforms.
The PM noted that the reforms being implemented should have been initiated decades ago. He stressed that the funds would be directed towards critical areas such as education and health, with a primary goal of eliminating corruption. “The government team is making efforts to achieve difficult but impossible tasks and goals.”
Shehbaz also noted that the presence of the World Bank’s vice president was a “guarantee of Pakistan’s development,” underscoring the international financial institution’s confidence in the country’s potential.