Pakistan has important strategic endowments and development potential. The country is located at the crossroads of South Asia, Central Asia, China and the Middle East and is thus at the fulcrum of a regional market with a vast population, large and diverse resources, and untapped potential for trade. The increasing proportion of Pakistan’s working-age population provides the country with a potential demographic dividend but also with the critical challenge to provide adequate services and increase employment.

Pakistan faces significant economic, governance and security challenges to achieve durable development outcomes. The persistence of conflict in the border areas and security challenges throughout the country is a reality that affects all aspects of life in Pakistan and impedes development. A range of governance and business environment indicators suggest that deep improvements in governance are needed to unleash Pakistan's growth potential.

Helped by cheap international oil prices and steady implementation of its reforms program, economy has showed resilience. Despite political uncertainty in July-December 2014 and the September 2014 floods in Punjab that affected agricultural crops, macroeconomic indicators have improved during ongoing FY 2015. Supported by a favorable slump in international oil prices, and stellar implementation of the IMF reform program; growth recovery remains underway, with projected GDP growth now at 4.3-4.6 percent.

Pakistan’s economic growth is showing signs of sustained recovery despite persistent energy constraints. Preliminary data for the first semester of FY 2015 show growth picking up, driven mainly by agriculture and services and despite weaker than expected manufacturing. Growth was better than last year in cotton, wheat and rice crops despite the floods. The service sector was boosted by road transportation, the telecom industry, finance and insurance. Growth of large-scale manufacturing was positive but below last year and arising from strong performance of pharmaceuticals, electronics, automobiles, iron and steel. Nevertheless energy constraints and weak external demand continue to pose challenge for this sector.

Despite some gains Pakistan’s low human development indicators undermine its labor force productivity and economic growth. Pakistan ranks 146 out of 187 countries in the 2014 Human Development Index (HDI) with most indicators lower than most countries in South Asia, and is unlikely to meet the MDGs on several indicators by 2015. Access to education remains low and completion rate for primary education is among the lowest in the world. In 2013 public spending on education was 2.1% of GDP which reflects on the quality, poor teaching and learning outcomes and inadequate infrastructure. Although some provinces (Punjab) have made headway in reducing the gender gap, at 61% girls’ participation at primary level lags 10 percentage points behind boys’. Public spending on health was 1% of GDP in 2013, making Pakistan one of the lowest spenders worldwide. Health outcomes have improved but at a slow pace while nutritional outcomes have not improved over the last two decades, and have even deteriorated for some indicators. The 2011 National Nutrition Survey estimated that the rates of child stunting have not changed since 1965 with 44% of children being stunted; 15% of Pakistani children under 5 suffer from acute malnutrition.

According to official statistics, Pakistan has made substantial progress in reducing poverty. The headcount poverty, according to World Bank staff calculations, fell nationally from 35 percent in 2002 to an estimated 13.6 percent in 2011. Reductions in poverty have been strong in both urban and rural areas, and the fall in rural poverty from 40 to 16 percentage points between 2002 and 2011 is particularly striking. This decline in poverty is confirmed when examining the poverty headcount according to the international poverty line of $1.25 per capita. According to this metric, poverty in Pakistan declined from 36 percent in 2002 to 11 percent in 2011. Pakistan now has the second lowest headcount poverty rate in the South Asia region, after Sri Lanka (4 percent). A large mass of the population moved from just below to just above the official poverty line, which is why small improvements in households' real consumption have translated into substantial reductions in poverty. 

Last Updated: Apr 17, 2015


The World Bank Group's Country Partnership Strategy (CPS) for Pakistan for FY2015-19 was formulated after an extensive, country-wide consultations process, with a diverse set of stakeholders. It is structured to help the country tackle the most difficult—but potentially transformational—areas to reach the twin goals of poverty reduction and shared prosperity. The four strategic pillars—results areas—of the CPS are anchored in the Government’s framework of 4Es: Energy, Economy, Extremism and Education; and the initial priorities of the upcoming Vision 2025.

The Result Areas are:

Transforming the energy sector: The WBG is committed to support reforms and large investments in the power sector to reduce load shedding, expand low-cost generation supply, improve governance and cut losses.

Supporting private sector development: The WBG will aim to expand policy-based support for strengthening the business environment, including in the provinces, to improve competitiveness and expand investment, improve productivity of farms and businesses, and make cities more growth friendly to create productive and better jobs (especially for youth and women).

Reaching out to the underserved, neglected, and poor: This requires a stronger focus on micro, small and medium enterprises (MSMEs), women and youth, fragile provinces/regions and poorer districts, social protection, and resilience and adaptation to the impact of climate change.

Accelerating improvements in services: The pace of improvement is far too slow. At the federal and provincial levels this means increasing revenues to fund services and setting more ambitious stretch targets for areas that are not producing change fast enough (especially education and health).

Leveraging regional markets: Interwoven with the four results areas, this cross-cutting program focuses on energy and trade, including critical building blocks of an integrated regional electricity market in South Asia with power transmission links to Central Asia and India; sub-regional collaboration; and other opportunities to capture the potential of cross border trade between Pakistan and its neighboring countries. Sustained regional cooperation has the potential to add 2 percent to Pakistan’s GDP per year, help create viable transit corridors, and contribute to overall stability in the region.

The CPS envisages an indicative financing envelope of about $11 billion over the CPS period. This includes an IDA lending of about $1.1 billion per year (subject to SDR/$ exchange rate). Pakistan could also benefit from additional regional IDA allocations, particularly in trade and energy.

Improved macroeconomic balances have made Pakistan eligible for IBRD lending, these include foreign exchange reserves equal to at least 2½ months of imports of goods and services and a stable or declining public debt to GDP ratio. IBRD lending could be up to the limit of $500 million a year or a maximum of $2 billion in total over the CPS period.

The IFC will also expand its efforts to bring in more private capital, investing $500 million–700 million a year from its own sources and mobilizing another $50 million–100 million per year from other investors. Altogether with MIGA and MDTF, the financing envelope would represent a 20 percent increase over the last CPS period.

As of February 28, 2015, Pakistan's portfolio consisted of 21 active projects (IDA + IBRD) with a total commitment of $4.4 billion. The Bank manages a Multi-Donor Trust Fund for conflict affected areas of about $183 million, which provides grants to KP, FATA and Balochistan. In addition, the Bank maintains an extensive and ongoing analytic work program on a wide range of economic and sector specific topics.

Last Updated: Apr 17, 2015

The World Bank, Pakistan is helping the Federal and Provincial Governments in implementing various reform programs aimed at encouraging growth, investment, and employment generation. Reforms at the provincial level are specifically aimed at improving delivery of social services like education, health, clean drinking water, and sanitation. These efforts have yielded impressive results in many areas:

Investing in Education: Over the past decade, Pakistan has made considerable efforts in improving access to education through a series of reform initiatives, led by provincial governments, some of which have been supported by development partners.

In Sindh, 16,800 teachers were recruited through a test, merit and need based recruitment process, and have been provided a two week induction training, 800 master trainers and supervisory staff were also trained during this process to provide training and supervisory support.

Out of a total of 40,356 schools, 22,471 School Management Committees (SMCs) have been verified and PKR 678 Million (USD 6.78 million) disbursed to the committees for school based repairs and learning needs. The government has allocated a total of PKR 1750 Million (USD 17.5 Million) for the fiscal year 2014/15 which will be disbursed to the remaining SMCs after verification of their status. Each SMC is provided with an annual flat grant of PKR 22,000 (US$231) for primary schools, PKR 50,000 (US$526) for middle and elementary schools, and PKR 100,000 (US$1,052) for high and higher secondary schools. 

Enhancing Disaster Resilience: Since the 2005 Pakistan earthquake which led to approximately 73,000 deaths and caused damages to over 570,000 houses, the Bank has been supporting the Government of Pakistan in moving from a response based approach to a more pro-active risk management approach. The urgency and importance to address Disaster Risk Management (DRM) holistically was further highlighted in the aftermath of the unprecedented 2010 floods, which affected over 20 million people and almost 1/5 of the total landmass of the country.

The objective of the Bank’s engagement in the sector is two-fold: i) increase the capacity of government for response and recovery; and, ii) increase current and future physical and fiscal resilience. Initially, through technical assistance, the Bank is supporting the government in identifying disaster risks to major urban centers of the country and strengthening capacity of selected disaster management authorities. Following the floods of 2014 and at the request of GoP, the Bank is preparing the USD 150 million IDA-funded Disaster and Climate Resilience Improvement Project (DCRIP) to support restoration of resilient flood protection infrastructure and strengthen government capacity to manage disasters and climate variability. During the current CAS period, the Bank would also be engaging with other provinces to mitigate disaster risks and enhance resilience.  

Protecting the poorest: In social protection, the Bank has helped the government in establishing the social safety net systems. The Benazir Income Support Program (BISP) is the country’s national safety net program and the Bank’s support focuses on increasing its targeting efficiency and strengthening its operation. It provides income support in the form of predictable monthly cash transfers of US$15 to almost 4.8 million families (22 million people) of the poorest households for consumption smoothing as well as investments in human capital development. To date more than US$ 1.8 billion has been allocated and disbursed to BISP beneficiaries

Operating in conflict areas: The conflict in Khyber Pakhtunkhwa (KP) and the Federally Administered Tribal Areas (FATA) led to one of the worst security crises in Pakistan’s history, displacing millions of people and severely disrupting lives, livelihoods, and the provision of public services. The Bank is now administering the Multi-Donor Trust Fund (MDTF) for KP, FATA and Balochistan, which supports the implementation of a program for reconstruction and development aimed at facilitating the recovery from the impact of the armed conflict and reducing the potential for escalation or resumption. Donors have contributed a total of $183 million for the MTDF.

Supporting rural livelihoods: Since its inception in April 2000 to December 2014, PPAF has disbursed an amount of approximately Rs153 billion to its 129 Partner Organizations in 121 districts across the country. During the same period, 7.6 million individuals have availed the PPAF financing with 60% of the loans goin to women. 33,000 water and infrastructure projects have been initiated; 2,000 health and education facilities supported; 425,000 credit groups and 126,000 community organizations formed, 665,000 staff and community members trained, 284,000 individuals received skills/entrepreneurial trainings, 71,000 assets transferred to ultra and vulnerable poor households, 26,279 individuals including women and youth trained on enterprise development under Waseela-e-Haq National & Waseela-e-Haq Sindh program of BISP and facilitated in establishing successful ventures, and 29,500 persons with disabilities rehabilitated.

Last Updated: Apr 17, 2015


Pakistan: Commitments by Fiscal Year (in millions of dollars)*

*Amounts include IBRD and IDA commitments