World Bank Greenlights $350 Million Financing For Pakistan

The Board of Executive Directors at the World Bank granted approval on Wednesday for a substantial $350 million in financing dedicated to supporting fiscal and competitiveness reforms in Pakistan. This financial injection is directed towards the Second Resilient Institutions for Sustainable Economy (RISE-II) Operation, which is designed to fortify fiscal management and foster competitiveness, ultimately promoting sustained and inclusive economic growth, according to an official statement from the World Bank.

Najy Benhassine, the World Bank Country Director for Pakistan, emphasized the urgency of fiscal and structural reforms in Pakistan, stating, "RISE-II completes a first phase of tax, energy, and business climate reforms geared to raising additional revenues, improving the targeting of expenditures, and stimulating competition and investment."

The RISE-II Operation targets better fiscal management through initiatives such as improving fiscal policy coordination, enhancing debt transparency and management, strengthening property taxation, and enhancing the financial viability of the power sector, as outlined by the World Bank. Additionally, it aims to boost growth and competitiveness by reducing the cost of tax compliance, enhancing financial sector transparency, promoting digital payments, and facilitating exports through lower import tariffs.

Derek H. C. Chen, Task Team Leader of the operation, stressed the importance of seizing the opportunity provided by RISE II and parallel support from other International Financial Institutions (IFIs) to address long-standing structural distortions in Pakistan's economy after the upcoming general elections. Failing to leverage this opportunity could risk pushing the country back into stop-and-go economic cycles, Chen warned.

In a recent report titled 'Leveraging Diaspora Finances for Private Capital Mobilization,' the World Bank projected a decline in remittance flows to Pakistan, citing economic turmoil, a balance of payment crisis, and high debt as factors contributing to a diversion of remittances from formal to informal channels.

Martin Raiser, the World Bank’s Regional Vice President for South Asia, highlighted Pakistan's challenging economic conditions, including floods and climate change, emphasizing the need for the country to decide on crucial steps toward a brighter future.