World Bank’s $40 billion country partnership framework to stabilize Pakistan’s economy

 

World Bank’s long-term support vital for Pakistan’s economy  

Pakistan is set to receive between $3 billion and $4 billion from the World Bank Group (WBG) under the newly launched $40 billion Country Partnership Framework (CPF), which will run from the 2025-26 financial year until June 2035. This long-term initiative aims to bolster Pakistan’s economic resilience, drive sustainable growth, and address the country’s most pressing development challenges.

Announced last month in Washington and officially launched in Islamabad earlier this month, the CPF will be supported by:

• $20 billion from the World Bank’s lending envelope
• $14 billion from the International Development Association (IDA)
• $6 billion from the International Bank for Reconstruction and Development (IBRD)

Private Sector Boost through IFC and MIGA

The International Finance Corporation (IFC), the WBG’s commercial lending arm, is expected to inject between $1.5 billion and $2 billion annually to boost private sector productivity through diversified investments and advisory services.

Meanwhile, the Multilateral Investment Guarantee Agency (MIGA) will continue supporting its $205 million portfolio and seek new opportunities to encourage private investment by leveraging the WBG’s Guarantee Platform. Both entities aim to de-risk projects through blended financing and stimulate private sector growth, especially in underfunded sectors needing affordable local currency financing.

 

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Comprehensive Development Goals

The CPF targets several critical sectors to improve living standards and economic productivity, including:

·       Health and nutrition

·       Basic education

·       Social safety nets

·       Clean energy and air quality

·       Climate resilience

·       Private sector productivity

It also aims to achieve six key outcomes:

1. Reduced child stunting
2. Lower learning poverty
3. Increased climate change resilience
4. Cleaner energy and better air quality
5. More public resources for inclusive development
6. More productive private sector investment

Cross-cutting interventions will prioritize social safety nets, financial inclusion, digital connectivity, and transportation infrastructure to protect vulnerable populations—particularly women.

 

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Strategic Shift for Long-Term Growth

This initiative marks a significant shift from previous short-term financing cycles, introducing a more sustainable, long-term development strategy. The CPF also features a mid-term Performance and Learning Review (PLR) scheduled for FY 2029-30 to assess progress and make necessary adjustments.

The World Bank’s strategy focuses on addressing Pakistan’s most severe challenges:

• The human capital crisis
• Vulnerability to climate change
• High energy costs
• Hosting some of the world’s worst air quality hotspots

The CPF also supports policy reforms aimed at promoting private-led growth and creating fiscal space for long-term investments in partnership with the International Monetary Fund (IMF), Asian Development Bank (ADB), and other development partners.

Historical Context and Financial Commitments

The World Bank Group has a long history of collaboration with Pakistan, having committed over $48.3 billion in assistance and approximately $13 billion for private-sector initiatives. MIGA has provided an additional $836 million in guarantees.

 

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Currently, the World Bank Group’s portfolio in Pakistan consists of 106 active projects with a total commitment of $17 billion across its three main entities: IBRD, IFC, and MIGA.

Key Players in the Framework

·       International Development Association (IDA): Provides concessional loans and grants to the world’s poorest countries.

·       International Finance Corporation (IFC): Supports private-sector development through investment, advisory, and asset-management services.

·       Multilateral Investment Guarantee Agency (MIGA): Offers political risk insurance and credit guarantees to protect foreign investments.

·       International Centre for Settlement of Investment Disputes (ICSID): Provides arbitration services for international investment disputes.

This CPF marks the most comprehensive and ambitious partnership between Pakistan and the World Bank Group to date, aiming to lay a solid foundation for long-term, inclusive, and sustainable growth.

Source: We News