The World Bank is close to approving a $20 billion indicative loan package for Pakistan, a pioneering 10-year initiative to shield its funded projects from political transitions and focus on six specific areas, according to a media report. .
The programme, titled “Pakistan Country Partnership Framework 2025-35”, aims to improve social indicators in the most neglected but important areas, The express tribune the newspaper reported, citing official documents.
It will focus on reducing child stunting, combating learning poverty, improving climate resilience, decarbonizing the environment, expanding fiscal space and boosting private investment to improve productivity.
These areas have broad support across the political spectrum and are expected to be unaffected by changes in government during the period 2025-2035, which is expected to include at least three general elections.
This ‘National Partnership Framework’ is scheduled to be approved by the World Bank board on January 14, after which the global lender’s vice president for South Asia, Martin Raiser, is also expected to visit Islamabad.
According to the World Bank assessment, the planning framework “will help protect the program from the country’s volatile politics and frequent changes in priorities and requests that follow changes in government.” Requests arising from changes in government have caused “fragmentation of the World Bank portfolio and diluted effects,” he said.
A key Pakistani official, who was part of the development of the framework, said the World Bank chose Pakistan as the first country where it would introduce the 10-year partnership strategy.
“The World Bank’s total indicative lending envelope for fiscal years 2025 to 2035 will amount to about $20 billion,” reads a draft of the framework.
Of the $20 billion, the World Bank’s concessional arm, the International Development Association (IDA), will lend $14 billion and the remaining $6 billion is expected to be provided through a relatively expensive window: the Bank. International Reconstruction and Development (IBRD). ).
“However, these indicative loans will depend on the evolution of IDA financing over the years, Pakistan’s position and performance, including with respect to the Sustainable Development Financing Policy and its IDA vulnerability indicators. debt,” the document reads.
In addition to the $20 billion in loans to the Pakistani government, the new framework also aims to support another $20 billion of private loans provided by the other two arms of the World Bank: the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). ). This brings the total package to $40 billion, but official loans will amount to $20 billion, according to the newspaper.
The new loans will focus on six areas that “currently enjoy strong support across the Pakistani political spectrum,” according to the documents. However, it will phase out loans from 10 lower-impact sectors, such as transportation, power transmission, telecommunications, tertiary healthcare and higher education.
The World Bank’s expensive, concessional loans will be for “larger projects on average, more frequent scale-ups and expansions, and fewer pilots and one-off operations,” according to the planning document.
The Washington-based Bank’s new strategy marks a shift from “short-term macrofiscal adjustment programs and often small investments dispersed across a wide range of sectors, to more selective, stable and larger investments in areas that are critical to sustained development and growth.” “.
The documents stated that the World Bank would continue to support reforms to stimulate growth and investment and create more fiscal space.
Implementation of the 10-year framework will be supported by rolling two-year business plans that both parties will agree to, according to the document.
Published – January 6, 2025 02:38 am IST
