The World Bank In Pakistan

Pakistan is experiencing severe economic challenges reflecting long-standing structural weaknesses. Pakistan made significant progress towards reducing poverty between 2001 and 2018 when the expansion of off-farm economic opportunities and increased inflow of remittances allowed over 47 million Pakistanis to rise out of poverty. However, this rapid poverty reduction has not fully translated into improved socio-economic conditions, as human capital outcomes have remained poor and stagnant, with high levels of stunting at 38 percent and learning poverty at 75 percent. In addition, reflecting a consumption-driven growth model, with limited productivity-enhancing investment and exports, strong economic growth often comes at a cost of economic imbalances and frequent macroeconomic crises. Long-term growth of real gross domestic product (GDP) per capita therefore has been low, averaging only around 2.2 percent annually over 2000-22.

Pakistan’s economy is currently under severe stress with low foreign reserves, a depreciating currency, and high inflation. With high public consumption, economic growth increased substantively above potential in FY22 that led to strong pressures on domestic prices, external and fiscal sectors, the exchange rate, and foreign reserves. These imbalances were exacerbated by the catastrophic flooding in 2022, surging world commodity prices, tightening global financing conditions, and domestic political uncertainty. Furthermore, distortive policy measures, including periods of informal exchange rate restrictions and import controls, delayed the IMF-EFF program, and contributed to creditworthiness downgrades, lower confidence, high yields and interest payments, and the loss of access to international capital markets.

Economic activity has fallen with policy tightening, flood impacts, import controls, high borrowing and fuel costs, low confidence, and protracted policy and political uncertainty. The devastating floods, along with difficulties in securing quality fertilizers and animal feed, have reduced agricultural output and labor opportunities for low-income workers. Similarly, dwindling foreign reserves, import restrictions, flood impacts, high fuel costs, policy uncertainty, and the slowdown in domestic and global demand have affected industry and service sector activity. With the destruction of infrastructure and disrupted access to schools, medical facilities, and sanitation systems, the floods have negatively impacted health and education outcomes especially for rural areas, potentially affecting long-term human capital accumulation.

Economic growth is expected to slow and remain below potential in the medium-term. Real GDP growth is expected to slow sharply to 0.4 percent in FY23, reflecting corrective tighter fiscal policy, flood impacts, high inflation, high energy prices and import controls. Agricultural output is expected to contract for the first time in more than 20 years due to the floods. Industry output is also expected to shrink with supply chain disruptions, weakened confidence, higher borrowing costs and fuel prices, and heightened uncertainty. The lower activity is expected to spill over to the wholesale and transportation services sectors, weighing on services output growth. Predicated on completion of the IMF program and sound macroeconomic management, output growth is expected to gradually recover in FY24 and FY25 but remain below potential as low foreign reserves and import controls continue to curtail growth. In the absence of higher social spending, the lower middle-income poverty rate is expected to increase to 37.2 percent in FY23. Given poor households’ dependency on agriculture, and small-scale manufacturing and construction activity, they remain vulnerable to economic and climate shocks.

The Government faces a difficult policy challenge in maintaining progress towards macroeconomic stabilization. The economic outlook is dependent on timely and full implementation of policy reforms, with very high downside risks. Implementing the macro-stabilization measures and structural reforms underpinned by the IMF-EFF program is necessary for unlocking much-needed external refinancing and new disbursements from regional partners. Maintaining stability and a sustained recovery will require the development, communication, and effective implementation of a bold reform strategy, including: i) adherence to a flexible market-determined exchange rate and sound fiscal-monetary policies; ii) increased domestic revenue mobilization; iii) curtailing and improving the quality of public expenditures; iv) structural reforms to improve investment, competitiveness, and productivity; and v) urgent measures to restore the financial viability of the energy sector.

Last Updated: Apr 04, 2023

The Country Partnership Strategy (CPS) for Pakistan for FY2015-20 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 Pakistan team continues to engage with stakeholders on the next Country Partnership Framework (CPF). The CPF will draw from several analytical works, including Pakistan Systematic Country Diagnostic: Leveling the Playing Field, and the recently published Country Climate Development Report and Country Economic Memorandum.

The four results areas of the current CPS are:

Transforming the energy sector: WBG interventions are supporting improved performance of the energy sector by supporting reforms and investments in the power sector to reduce load shedding, expand low-cost generation supply, improve transmission, improve governance and cut losses.

Supporting private sector development: A mix of budget support, investments and analytical work supports improvements in Pakistan’s investment climate, in overall competitiveness, agricultural markets and productivity, and skills development. 

Reaching out to the underserved, neglected, and poor: Investments support financial inclusion, micro, small and medium enterprises (MSMEs), women and youth (including through enrollment outcomes), fragile provinces/regions and poorer districts, social protection, and resilience and adaptation to the impact of climate change.

Accelerating improvements in service delivery: At the federal and provincial levels the Bank supports increasing revenues to fund services and setting more ambitious stretch targets for areas that are not producing change fast enough (especially education and health). At a provincial level, this involves support to better service delivery in cities.

Cross cutting themes for the program include women’s economic empowerment, climate change and resilience, and regional economic connectivity.

The WBG has third-largest portfolio of $14.8 billion in Pakistan ($10.7bn IDA, $3.9bn IBRD, $0.2mn in Trust funds and co-financings). The portfolio is supporting reforms and investments to strengthen institutions, particularly in fiscal management and human development. Partnerships are being strengthened at provincial levels, focusing on multi-sectoral initiatives in areas such as children's nutrition, education and skills, irrigated agriculture, tourism, disaster risk management, and urban development. Clean energy, and social/financial inclusion, both remain major priorities.

Last Updated: Apr 04, 2023

ENHANCING DISASTER RESILIENCE

Being one of the most vulnerable countries to climate change Pakistan is recurrently affected by catastrophes, including the unprecedented 2022 floods which affected an estimated 33 million people and resulted in US$14.9 billion in damages and US$15.2 billion in economic losses . Pakistan’s economy continues to suffer chronic strain from prevailing and likely future threats of hazards. Since the 2005 Pakistan earthquake, which led to nearly 73,000 deaths and caused damages to over 570,000 houses, the Bank has been supporting the Government of Pakistan in shifting to an anticipatory risk management approach. Initially, the Bank provided technical assistance to the government to highlight physical and fiscal risks from hazards, including risk assessments of federal and provincial capitals. In parallel, the Bank also used grant resources to build the capacity of Provincial Disaster Management Authority of Balochistan.

Following the floods of 2014, at the request of Government of Pakistan, the World Bank prepared the US$125 million IDA-funded Disaster and Climate Resilience Improvement Project (DCRIP) to support the restoration of flood protection infrastructure and strengthen government capacity to manage disasters and climate variability in Punjab. The project was successfully concluded in November 2021,achieving its intended development objectives and surpassing the targets for several key results indicators. DCRIP directly benefitted more than 8 million people, half of which are women. The project also repurposed US$7 million to support the Government of Punjab in the pandemic emergency response through procurement of personal protection and healthcare equipment.

In 2016, the Bank also prepared and delivered the US$100 million IDA-funded Sindh Resilience Project (SRP) to mitigate flood and drought risks in selected areas, and strengthen Government of Sindh's capacity to manage natural disasters. About 5.75 million people across the province have benefitted from project interventions till date. The drought mitigation component of the project, comprising construction of small groundwater recharge dams, has already started generating strong development impacts for the target communities. In 2021, the Bank approved an additional financing of US$200 million to scale up the small groundwater recharge dams component and set up an emergency rescue service for Sindh.

The Bank has also prepared and delivered the US$188 million IDA-funded Pakistan Hydromet and Climate Services Project which aims to strengthen Pakistan’s public-sector delivery of reliable and timely hydro-meteorological services and enhance community resilience to shocks. The Contingent Emergency Response Component (CERC) was activated under this project to disburse US$150 million in response to the 2022 floods to provide cash assistance to 1.3 million flood affected families.

Furthermore, as part of comprehensive emergency response and rehabilitation support for 2022 floods, the Bank delivered two emergency projects for the province of Sindh, which was disproportionately affected by the catastrophe. The US$500 million IDA-funded Sindh Flood Emergency Rehabilitation Project aims to rehabilitate damaged infrastructure and provide short-term livelihood opportunities through cash-for-work in selected areas of Sindh affected by the 2022 floods. The project will also strengthen the capacity of the Government of Sindh to respond to the impacts of climate change and natural hazards through expansion of the Sindh Emergency Rescue Service (Rescue 1122) and enhancing the preparedness of relevant line departments. The Project is expected to benefit 2 million people through rehabilitated infrastructure while short term livelihood support will be provided to 100,000 households.

Similarly, the IDA-funded US$500 million Sindh Flood Emergency Housing Reconstruction Project aims to deliver beneficiary-driven, multi-hazard resilient reconstruction of core housing units damaged or destroyed in the floods of 2022 in selected districts of Sindh. The Project will support the provision of an estimated 350,000 housing subsidy cash grants and strengthen the capacity of the Government of Sindh by providing technical assistance for the overall housing reconstruction program.

The Bank has also launched the Country Climate and Development Report (CCDR) for Pakistan. The Pakistan CCDR provides analyses and policy recommendations on harmonizing efforts to achieve further economic growth and lower poverty rates, on the one hand, with the pursuit of a climate-resilient, low-carbon, and equitable development path, on the other. In light of the devastating 2022 heatwaves and floods and the country’s vulnerability profile, the CCDR strongly emphasizes the need to build long-term resilience. Further, it explores pathways for Pakistan to achieve deep decarbonization by 2050, and eventually reach net-zero emissions by 2070 without undermining its development ambitions.

HEALTH

Pakistan has made progress in mainstreaming the Sustainable Development Goals (SDGs) in National Policies and Strategies, however the implementation process to achieving the targets remains slow. There is an uneven progress in reducing maternal and child deaths in Pakistan. According to the most recent maternal mortality survey in 2019, the country’s maternal mortality ratio  was 186 deaths per 100,000 live births down from 276/100,000 live births in 2006-07.  Large gaps exist across provinces with Sindh and Balochistan having twice the number of maternal deaths as compared to the national average.  Despite progress, the country has one of the highest infant and under-5 mortalities in the region (62 and 74 deaths per 1,000 live births, respectively). Twenty-two percent of the children born have low birth weight with variations across provinces.

On average, access to quality reproductive, maternal, newborn, child, and adolescent health with nutrition services in Pakistan is inadequate, with regional disparities. About 49 percent of pregnant women do not receive the recommended four or more anti-natal care (ANC) visits essential for a safe and healthy pregnancy outcome. With 33.8 percent of births outside of health facilities, the risk of maternal and infant mortality and morbidity is high. 42 percent of women of reproductive age in Pakistan have anemia due to poor nutrition. At 3.6 births per woman, Pakistan’s fertility rate is still relatively high, and except for Punjab, adolescent fertility has increased, and modern contraceptive prevalence rate (mCPR) has been low in the last decade at 25 percent. High fertility rate and teenage pregnancies contribute to poor maternal and child health outcomes which pose risks of death and illness.  Poor health affects all facets of women’s lives including delayed development milestones, education, learning skills and gainfully participating in the labor force.

Stunting rates for children under age 5 have dropped from 45% to 40.2% from 2013 to 2018. However, it is still high and large disparities exist among provinces. This prevalence varies from 36.4% in Punjab to 46.6% in Balochistan.

Immunization coverage for children aged 12-23 months, has increased considerably over the past 5-7 years from 54% in 2013 to 76% in 2020. In Punjab 89.9% of children are fully immunized while in Khyber Pakhtunkhwa, Sindh and Balochistan 68.4%, 61% and 37.6% are respectively fully vaccinated.

The World Bank has been supporting the health sector in Pakistan through national and provincial projects. National Immunization Support Project closed in June 2022 had supported immunization of children across the country, while two new projects have been approved in this fiscal year (FY 2022-2023). The National Health Support Program will support the strengthening of equitable delivery and quality of essential health services at the primary level and the Sindh Integrated Health and Population Project will improve quality health services in selected areas and restore and rehabilitate healthcare services impacted by floods. Provincial Human Capital Investment projects are being implemented in Balochistan, Punjab and Khyber Pakhtunkhwa and they aim to improve utilization of quality health targeted and social services to the poor and vulnerable population. The World Bank is also preparing a Punjab Family Planning Program, with the aim to improve modern contraceptive prevalence rate (mCPR) in the province.

Sources: Pakistan Demographic & Health Surveys 2006-07, 2012-13 & 2017-18, Maternal Mortality Survey 2019, National Nutrition Survey 2018, Third-Party Verification Immunization Coverage Survey 2020

EDUCATION

National and Federal projects

Actions to Strengthen Performance for Inclusive and Response Education (ASPIRE) is a 5-year US$200 million program that became effective in August 2020. The program is aimed at enhanced targeting of COVID-19 education response, generating improved learning opportunities for out-of-school children (OOSC) and at-risk students, and enabling stronger federal-provincial coordination and management. To date, the Ministry of Federal Education and Professional Training (MoFEPT) and the provincial education departments have achieved four Disbursement-Linked Results (DLR): adoption of National School Health and Safety Protocols, approval of National Education Response and Resilience Plan, provision of distance learning kits to 50,000 students across the country, and provision of hygiene and cleaning kits to 20,000 public schools nationwide. The activities planned in FY23 mostly focused on construction and rehabilitation, communication campaigns, teachers training, multi-modal programs, and specific intervention related to Out of School Children (OOSC). The ASPIRE program has also been successful at leveraging the Inter-Provincial Education Ministerial Conference (IPEMC) and the Technical Steering Committee (TSC) platforms for improved coordination between the Federal and Provincial Education Departments.

Pandemic Response Effectiveness in Pakistan project (PREP), initiated in April 2020, will close on June 30, 2023. Different donor organizations extended their support in the form of grants and loans to overcome the pandemic situation all over the world, especially to support the education sector. The PREP is a USD187 million project of which USD17 million is the education component. The education component includes distance-learning activities and the development and implementation of plans to ensure the continuity of learning including remote learning options, at all levels of education. This includes TV /radio broadcasts, virtual networks of teachers, and other means of distance delivery of academic content at primary, secondary and higher secondary levels. The key activities that are being procured under PREP include: i) Teleschool initiative through Allama Iqbal Open University (AIOU), ii) Content procurement for Teleschool, iii) Strengthening of E-Taleem portal including Virtual Teacher Training (VTT) and Learning Management System (LMS) modules, iv) Development of VTT Training Modules/Courses v) Smart classrooms vi) Procurement and distribution of hand-held devices vii) Communication campaign viii) School on wheels, and ix) the monitoring and evaluation activities.

Data and Research in Education (DARE) is a US$10 million Bank Executed Trust Fund (BETF) provided by the Foreign, Commonwealth & Development Office alongside the ASPIRE program. The project supports Pakistan education sector’s response and recovery by providing technical assistance to the Federal Government, in order to strengthen the education data infrastructure and coordination mechanisms between the federal and provincial governments, enhance evidence-based decision making and improve targeting of programs to reduce inequality and gender-gap. The main components under DARE include strengthening the provincial-Federal education data management processes, enhancing sector coordination on student learning outcomes and improvement of sector monitoring, evaluation and decision making by supporting policy research and impact evaluations.

COVID 19 Response, Recovery, and Resilience in Education Project (RRREP)  - a Global Partnership for Education funded grant of US$19.85 million was successfully closed in November 2022. The project ensured learning continuity through a) broadcasting the digital content on National TV and Radio which reached around 2.7 million children across 58 lagging districts in Pakistan; b) contributed to the evolving EdTech ecosystem at the Federal level by enhancing the Ministry’s digital content library (6000 lessons for grades K-12) and mapping them to the National and Provincial Student Learning Outcomes; and c)  providing adequate infrastructure for the delivery of digital content. Moreover, to ensure safe school reopening post COVID-19, around 1.8 million children in over 12,000 primary schools received sanitizing and hygiene kits, as well as learning materials to lower barriers for re-enrollment and attendance. The Bank has also supported the government’s communication campaign on safe school practices as well as re-enrolment campaigns to encourage families to send their children back to schools once schools re-opened. The project also supported National strategic policy dialogue on strategies to mainstream Out of School Children (OOSC).

Under the 5-year Higher Education Development in Pakistan (HEDP) the World Bank supports research excellence in strategic sectors of the economy, improved teaching and learning and strengthened governance in the higher education sector. The project has been successful in bringing some key reforms in the sector, including: introduction of an Undergraduate Education Policy which established the criteria for Associate Degree and transition of all Bachelor’s Degree programs from two-years to four-years; research capacity development by providing competitive research, innovation, and commercialization grants, such as the Rapid Research Grants, for research on critical COVID-19 related topics and Innovative Seed Fund to support startups and entrepreneurs; expansion of digital connectivity and remote learning systems to ensure continuity of education during COVID-19 and capacity building trainings of faculty, especially females under the newly established National Academy for Higher Education. HEDP closes on June 30, 2024.

The World Bank supported Punjab with an reform program through the Punjab Education Sector Project-III program (US$300 million), which closed  in June 2022. The Bank also supports interventions in the education sector in Punjab through the Human Capital Investment project (US$200 million, with US$30 million supporting strengthening and scale-up of early childhood education in 11 districts in South Punjab). The project supports the development of a 2-year early childhood education (ECE) curriculum and strengthening of ECE services in Punjab. Currently a minimum of 11,000 ECE classrooms meet new quality standards, which include the presence of a trained teacher and caregiver as well as a kit with instructional material. In addition, content for teaching and learning materials is being updated to ensure alignment with evolving curricula and standards.

Sindh

The 5 year Sindh Early Learning Enhancement through Classroom Transformation (SELECT) project of $155 million, financed in part by the Global Partnership for Education grant ($55 million) supports the Sindh Education Sector Plan & Roadmap (SESPR) 2019–2024, focusing on 12 of 29 districts in Sindh, with the lowest performance on educational outcomes. Prioritized areas under SELECT include foundational literacy; teaching quality; classroom and provincial assessments improving access to elementary schools and enhancing the school learning environment, including in 250 flood-affected schools; proactive dropout mitigation (especially for girls) and transition from primary to secondary schooling through the development of a student attendance monitoring and redress system; and improved school and district-level governance which contribute to the achievement of its targets.

Balochistan

The Balochistan Human Capital Investment Project (BHCIP), which became effective in 2021, is implemented together with the health sector. The education component (US$17.75 million) focuses on the improved utilization of quality education services in selected refugee hosting districts. BHCIP funds the rehabilitation of schools and upgrading of primary schools to middle and high schools, merit-based hiring of additional teachers and strengthening of the education sector stewardship. To date, BHCIP has initiated the procurement of supplies for schools, including basic furniture, ECE classroom materials, science, and IT laboratory equipment. The project also aims to improve student assessment and teacher training across the province by supporting the Balochistan Assessment and Examination Commission and Provincial Institute of Teacher Education. Use of data for decision making and schools’ capacity to contribute to generating reliable data is another important element of the project that strengthens governance at school and district levels.

Khyber Pakhtunkhwa

In March 2021, the Government of Pakistan approved the US$200 million Khyber Pakhtunkhwa Human Capital Investment Project (KPHCIP) – a five-year project that aims to improve the availability, utilization, and quality of primary healthcare services and elementary education services in 4 districts of Khyber Pakhtunkhwa. The districts were selected because they have some of the highest refugee populations in the province. This financing includes a grant of USD $62.5 million from the IDA18 regional sub-window for refugees and host communities (IDA-18 RSW). The education component (US$115 million) of the project will focus on improving the availability, utilization and quality of education services in selected districts for all children, especially refugees and girls.  US$15M from the education component are being reallocated for flood rehabilitation and reconstruction in the original districts as well as 9 additional flood-affected refugee-hosting districts.  A project restructuring is underway to accommodate flood response activities.

OPERATING IN CONFLICT AREAS

In the aftermath of the militancy crisis in 2009 in Pakistan, the Multi-Donor Trust Find (MDTF) for Khyber Pakhtunkhwa (KP), Federally Administered Tribal Areas (FATA), and Balochistan was established in August 2010 to support the reconstruction, rehabilitation, reforms, and other interventions needed to build peace and create the conditions for sustainable development. Round I of MDTF projects was implemented from August 2010 to March 2017 and focused on helping the provinces come out of the crisis and take strides towards conflict prevention and peacebuilding. Subsequently, Round II commenced in April 2017 and continues the drive towards reconciliation, peacebuilding and enhancing state- citizen trust by focusing on three pillars: (i) Growth and Jobs Creation; (ii) Improved Service Delivery; and (iii) Policy Reforms and Improved Governance.

The MDTF has approximately $284 million in resources- $122.84 million (approximately 89% of allocated funds) has been disbursed as of July 31, 2022, and $105.19 million (76% of allocated funds) have been utilized. On January 20, 2022, the MDTF SC approved a one- year no-cost extension to the end disbursement date of the funds, taking it to December 31, 2023. There are currently six active government projects executed projects being implemented under the MDTF, worth a commitment of US$94 million. Two projects, ERKP and Digital Jobs in Khyber Pakhtunkhwa, closed in FY 21-22. While active projects address more than one pillar of the MDTF Round II, they may be categorized as follows: One project worth US$15 million in Growth and Job Creation; two projects worth US$40 million in Improved Service Delivery; and three projects worth US$39 million in Policy Reform and Improved Governance. Of the US$283.7 million, approximately US$253 million has been awarded to government executed activities and US$24 million has been awarded to World Bank executed activities. As of January 2023, ~US$242 million has been disbursed in government executed activities (Table 13) and ~US$24 million in World Bank executed activities.

The work of the MDTF is particularly important after the passage of the Thirty-First Amendment to the Constitution by the National Assembly on May 24, 2018, which has merged the seven agencies of FATA with the province of Khyber Pakhtunkhwa. The MDTF helped address the COVID-19 emergency through provision of health equipment. This included procurement of 55 ventilators, 19,000 N-95 masks, 1,500 canes for sanitizers, 25,000 gloves, 10,000 face shields, 1 million surgical masks, 60,000 viral transport medium kits, and five automated RNA extraction machines. Moreover, the ERKP project supported small and medium enterprises (SMEs) impacted by COVID-19 through provision of matching grants (MGs). The MDTF continues to achieve results towards under its three results areas of (i) Enhanced productivity and job creation (through entrepreneurship and skilled labor); (ii) Improved livelihoods and access to basic services; and (iii) Enhanced transparency and accountability in public service delivery, and effective resource management.

Last Updated: Apr 04, 2023