World Bank warns Pakistan that level of private investment in the country is significantly low
The World Bank has urged Pakistan to accelerate efforts to boost private investment, warning that current levels remain significantly below targets outlined in the Country Partnership Framework (CPF) 2026–35. The call was made during a meeting between Federal Minister for Finance and Revenue Muhammad Aurangzeb and World Bank Pakistan Country Director Bolormaa Amgaabazar, where both sides reviewed ongoing cooperation and reform priorities under the CPF.
The Bank said increasing productive private investment is critical to lifting Pakistan’s investment-to-GDP ratio over the next decade. It pointed to policy and institutional barriers—including heavy regulation, subsidies, high taxes, trade protection, and the large footprint of state-owned enterprises—as key factors holding back productivity, investment, and export competitiveness.
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Private investment in Pakistan remains close to 10 percent of GDP, well below the 20–25 percent seen in regional peers such as India and Bangladesh. At the same time, exports have fallen from around 16 percent of GDP in the 1990s to roughly 10 percent today.
To address these challenges, the World Bank proposed a results-based reform approach built around clear policy milestones, measurable indicators, and targeted technical assistance. It said a shift toward a more open, export-oriented growth model could unlock an estimated $60 billion in additional annual export potential, provided the business environment improves decisively.
The Bank also briefed the finance minister on progress under the CPF, including fiscal and revenue reforms, macroeconomic stabilization, and policy-based engagements. While acknowledging recent gains in macroeconomic stability through fiscal and monetary discipline, both sides emphasized the need to translate stability into sustained growth, higher investment, and job creation.
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Discussions centered on developing a programmatic investment framework aligned with CPF goals, covering reforms to the business environment, state-owned enterprise governance, trade facilitation, capital market development, and export competitiveness.
Minister Aurangzeb reaffirmed the government’s commitment to structural reforms, highlighting tariff rationalization, regulatory modernization, improved SOE governance, and greater transparency. He also stressed the importance of deepening capital markets, expanding access to long-term financing, and strengthening institutional coordination to support private sector–led growth.
Employment and skills development featured prominently in the talks. The finance minister underscored the need for market-driven vocational and technical training, stronger public-private partnerships, and closer alignment with domestic and international labor demand, particularly in IT, healthcare, nursing, hospitality, and construction.
The World Bank shared details of its ongoing work on labor mobility, skills matching, and digital labor market platforms aimed at boosting productivity and overseas employment opportunities.
Both sides identified sectoral priorities—including digital services exports, agriculture and agribusiness, minerals and mining, healthcare, and selected manufacturing—as potential focus areas for future World Bank-supported initiatives. They agreed that targeted sector-specific interventions, supported by regulatory and institutional reforms, could deliver meaningful gains in employment and exports.
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The Bank also discussed the potential use of policy-based guarantees in future operations to support liability management, refinance high-cost debt, and enable innovative financing, subject to agreed policy milestones. Climate finance, regulatory streamlining, and coordination with provincial governments were also reviewed.
The meeting concluded with agreement to continue technical-level engagements to refine priorities and advance preparation of future World Bank-supported programs aligned with Pakistan’s reform agenda and CPF objectives.
Source: Profit Pakistan