EconomyPakistan

World Bank Approves $350 Million for Institutional Reforms in Pakistan

The World Bank has approved a $350 million financing package for the Second Resilient Institutions for Sustainable Economy (RISE-II) Operation in Pakistan. This operation is aimed at strengthening fiscal management and promoting competitiveness for sustained and inclusive economic growth.

Najy Benhassine, the World Bank Country Director for Pakistan, emphasized the urgent need for fiscal and structural reforms in Pakistan to restore macroeconomic balance and lay the foundations for sustainable growth. He stated that RISE-II completes a first phase of tax, energy, and business climate reforms geared towards raising additional revenues, improving the targeting of expenditures, and stimulating competition and investment.

The operation contributes to better fiscal management by improving fiscal policy coordination, enhancing debt transparency and management, strengthening the taxation of property, and improving the financial viability of the power sector. It also aims to foster growth and competitiveness by reducing the cost of tax compliance, improving financial sector transparency, encouraging the use of digital payments, and promoting exports by lowering import tariffs.

Benhassine further emphasized that the financing will help reduce losses in the energy sector in the country. Pakistan’s energy sector has been suffering from significant transmission and distribution losses, costing the national exchequer billions of losses annually. In the fiscal year 2022-2023, the country lost Rs380 billion due to power theft, and the loss is estimated to reach Rs520 billion next year.

The World Bank has been actively involved in supporting Pakistan’s economy. Earlier in June 2021, the World Bank’s Board of Executive Directors approved $800 million in financing for two programs in Pakistan—the Pakistan Program for Affordable and Clean Energy and the Second Securing Human Investments to Foster Transformation. These programs focused on measures to improve the financial viability of the power sector and support the country’s transition to low-carbon energy.

The approval of the RISE-II operation comes at a critical time for Pakistan’s economy. The country has been grappling with inflation, rising electricity prices, severe climate shocks, and insufficient resources for development. The World Bank’s continued support through initiatives like RISE-II is expected to play a crucial role in helping Pakistan navigate these challenges and lay the groundwork for a more stable and prosperous future.

Back to top button