The World Bank In Pakistan

Over the past two decades, Pakistan has achieved significant poverty reduction, but human development outcomes have lagged while economic growth has remained volatile and slow. Expansion of off-farm economic opportunities, and the increase in migration and associated remittances allowed over 47 million Pakistanis to escape poverty between 2001 and 2018. Despite rapid poverty reduction, human capital outcomes have remained poor and stagnant, with high levels of stunting at 38 percent and learning poverty at 75 percent. Reflecting a growth model based on private and government consumption, with productivity-enhancing investment and exports contributing relatively limited, Pakistan has experienced frequent macroeconomic crises. Growth of per capita gross domestic product (GDP) has been low, averaging only around 2.1 percent annually over 2000-18. The COVID-19 pandemic has also had serious impacts on human development outcomes and economic growth.

In early FY23, Pakistan’s economy was undergoing an overdue adjustment, as it recovered from the impacts of COVID-19. Supported by accommodative macroeconomic policies, the economy expanded by 6.0 percent in FY22. Strong domestic demand, coupled with low productivity growth, high world commodity prices, and the global economic slowdown contributed to severe external imbalances. To stabilize the economy, the Government began implementing a range of policies to constrain aggregate demand, including a contractionary budget and increases in administered energy prices. As a result of stabilization measures, growth was expected to slow, the exchange rate was expected to stabilize, total public debt was expected to decline gradually from current high levels, while foreign exchange reserves were expected to slowly accumulate.

Recent floods have had enormous human and economic impacts. Pakistan has been experiencing heavy monsoon rains since June 2022 leading to catastrophic and unprecedented flooding. Almost 15% of the country is underwater and just over 33 million people are affected. More than 2 million houses have been damaged or destroyed. Loss of life has also been considerable with 1,700 fatalities reported to date. Loss of livestock is also significant with more than 1.1 million animals estimated to have perished, while over 25,000 animal shelters have been damaged. More than 13,000 km of roads are reported to have been affected and 440 bridges have been damaged or destroyed, with these numbers expected to rise. Economic impacts are concentrated in the agricultural sector, with over 9.4 million acres of cultivated land destroyed, resulting in significant losses to cotton, date, wheat, and rice crops. Lower agriculture output is expected to negatively impact industrial and services sector activity, especially given textile sector reliance on cotton (textiles account for around 25 percent of industrial output). Flooding will impose a lingering drag on output through infrastructure damage, disruption to crop cycles, possible financial sector impacts (microfinance institutions report major solvency problems), and loss of human capital. Preliminary estimates suggest that as a direct consequence of the flood, the national poverty rate will increase by 2.5 to 4.0 percentage points, pushing between 5.8 and 9.0 million people into poverty.

The economic impacts of flooding is likely to delay much-needed economic adjustment. Growth is now expected to reach only around 2 percent in FY23. Due to higher energy prices, the weaker Rupee, and flood-related disruptions to agricultural production, inflation is projected to rise to around 23 percent in FY23.  With disruptions to exports (especially textiles) and higher import needs (food and cotton), the current account deficit is expected to narrow only slightly to around 4.3 percent of GDP in FY23 (from 4.6 percent in FY22). The fiscal deficit (including grants) is projected to narrow only modestly to around 6.9 percent of GDP in FY23 (relative to a budgeted deficit of 4.7 percent), reflecting both negative revenue impacts from flooding and increased expenditure needs.

The Government faces a difficult policy challenge in supporting relief and recovery while maintaining progress towards macroeconomic stabilization. Significant downside risks include: i) unexpected damages from the floods as on-the-ground damage assessments continue ii) political instability which may undermine a coherent and timely policy response; iii) worsening external conditions, including unforeseen increases in global commodity prices and interest rates; and iv) risks associated with large domestic and external financing needs, especially in the context banking sector liquidity constraints. To manage these risks, it will be critical to adhere to sound overall economic management and buttress market sentiment, including through articulating and effectively implementing a clear strategy for economic recovery; constraining fiscal expenditures to the extent possible and carefully targeting any new expenditures; maintaining a tight monetary stance and flexible exchange rate; and remaining on-track with critical structural reforms, including in the energy sector.

Last Updated: Oct 07, 2022

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 is engaging with stakeholders on the next Country Partnership Framework (CPF) this fiscal year. The Pakistan Systematic Country Diagnostic: Leveling the Playing Field (SCD) has recently been published. Both CPF and SCD will draw from the flagship Pakistan@100: Shaping the Future initiative which seeks to identify the main changes necessary for Pakistan to become an upper middle-income country by the time it turns 100 years old in 2047.

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 a portfolio of $13.7 billion in Pakistan ($9bn IDA, $4.4bn IBRD, $0.3mn in Trust funds). 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 08, 2022

HEALTH

In the last few years, Pakistan’s health indicators have progressed steadily. The nutritional status of mothers and children has shown progress, though slow and uneven. Stunting rates for children under age 5 have dropped from 45% to 38% from 2013 to 2018. However, large disparities still exist. This prevalence varies from 30% in Punjab to 40% in Khyber Pakhtunkhwa (KP).

While other Maternal and Child Health indicators have improved, significant challenges remain. The Maternal Mortality Rate (MMR) has improved from 276/100,000 live births in 2006-07 to 186/100,000 live births in 2019. The World Bank, through its Enhanced Nutrition for Mothers and Children Project, which closed in 2019, and the Sindh Enhanced Response to Reduced Stunting Project (SERRSP), closed in 2021, has supported the provision of nutrition specific and sensitive services.

Immunization coverage for children aged 12-23, has increased considerably over the 5-year span from 54% in 2013 to 66% in 2018. Punjab has a coverage rate of 80% for Fully Immunized Children, Sindh and Balochistan are at 49% and 29% respectively. The World Bank has contributed towards this crucial achievement through its National Immunization Support Project (NISP), which closed recently in June 2022. The National Health Support Program will continue to support immunization in addition to supporting the implementation of the EPHS (Essential Package of Health Services).

One of the areas that has remained relatively stagnant over the last few years is family planning. The Total Fertility Rate has declined very marginally from 3.8 in 2013 to 3.6 in 2018.  The Modern Contraceptive Prevalence Rate (mCPR) has declined from 26% in 2013 to 25% in 2018. In Punjab, where the Bank had provided support through the Punjab Health Sector Reform Project, the mCPR has been 27%. In other provinces, the mCPR is even lower – as low as 23% in KPK and 14% in Balochistan. The World Bank Pakistan team is preparing a Punjab Family Planning Program, with the aim to improve mCPR in the province.

Sources: Pakistan Demographic & Health Surveys 2006-07, 2012-13 & 2017-18, Maternal Mortality Survey 2019

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. Advance against year 1 targets have already been made and will be used by the provinces to finance activities contributing to program results. MoFEPT has reported the achievement of Year 1 Disbursement Link Results, including 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.

Data and Research in Education (DARE) is a US$10 million technical assistance provided by the Foreign, Commonwealth & Development Office alongside the ASPIRE program. The project aims at improving evidence based and targeted COVID-19 response and recovery through strengthened education data infrastructure and coordination mechanisms between federal and provincial governments.    

Four federal projects are currently underway. A GPE funded grant of US$19.85 million under the COVID 19 Response, Recovery, and Resilience in Education Project (RRREP) aims to strengthen federal and provincial capacities in the education sector to respond to and recover from the COVID-19 crisis, with a focus on disadvantaged and vulnerable populations. Under this project, the Ministry of Federal Education and Professional Training (MoFEPT), in close coordination with provincial departments, is o distributing health and hygiene supplies to 12,000 government schools across the country to ensure safe school reopening. MoFEPT has also developed a sensitization campaign on health guidelines vis-à-vis COVID-19 as well as learning continuity with the target of reaching 5 million children nationwide.

Under the education component of the Pandemic Response Effectiveness in Pakistan project (PREP), MoFEPT has engaged with media partners to broadcast education content – TeleSchool and Radio School to facilitate children during school closures. MoFEPT is currently developing a plan to develop additional content by grade levels to build on existing outreach in the coming months.

Under the 5-year Higher Education Development in Pakistan 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.

Punjab

Primary education in Punjab is achieving remarkable results in both participation and quality improvement, following an ambitious reform program supported by the PESP-III program (US$300 million), closing in June 2022. The Bank also supports interventions in the education sector in Punjab through the Human Capital Investment project (US$200 million, supporting scale-up of early childhood education in 11 districts) and the ASPIRE project (which supports lagging districts). Between 2014 and 2020, provincial school participation rates (age 6-15) went up from an estimated 78% to 80% (PSLM data), and there are now roughly 12 million children enrolled in schools supported by the public sector. For girls, the growth has been from 80 to 82% in the primary age group (6-10 years old), and from 68% to 72% in the secondary age group (11-15 years old).

School participation has been targeted through perhaps the largest public-private partnership program in the world, managed by the Punjab Education Foundation, that now enrolls around 2.6 million children. The province also provides conditional cash transfers to families to keep girls in school, and this is helping the lowest performing districts to substantially increase girls’ enrolment in schools. At the same time, Punjab is trying to reach children as early as possible by developing a 2-year early childhood education (ECE) curriculum. Currently around 7,000 ECE classrooms meet new quality standards, which include the presence of a trained teacher and caregiver as well as a kit with instructional material, and an additional 3,400 classrooms are being supported so that they can meet the quality standards. These classrooms are monitored by field-based inspectors using smartphone apps, that feed data into a live dashboard, helping policy makers to directly address problems in the field.

The province is investing heavily in improving the quality of education. School mentors (called AEOs) are using a contextualized version of the World Bank’s teach classroom observation tool to provide feedback to teachers on their pedagogic practices. An innovative teacher support package has also been rolled out during the pandemic, which provides remote support to teachers in an application. The innovative support package is also combined with training sessions during monthly teacher forums. Moreover, the province has reformed its student assessment system by adopting an Assessment Policy Framework. The province is currently aligning its assessment with global standards, through a “Policy Linking” exercise, making sure that it captures data on student learning that is benchmarked to global standards.

The challenges posed by the current COVID-19 crisis and the related school closures have been front and center over the last two years. The province has estimated that between 10 and 20% of students (with higher dropouts occurring among adolescent children) have dropped out out from school. A recent survey showed that learning outcomes among 4^th grade children have reduced from 2.4 to 2.2 Curriculum Adjusted Years of Schooling (CAYS) between November 2018 and November 2021 due to the pandemic. The World Bank program has supported the government to develop easy to understand messages on health behaviors, as well as the Taleem Ghar program, which provides distance education over television and digital channels. The Bank has also supported the government’s re-enrolment campaigns to encourage families to send their children back to schools the moment that the schools re-open. Further, the Bank has supported material development for early childhood education, procurement of materials to support students more effectively both in the classroom and at home.

Sindh

The Sindh Early Learning Enhancement through Classroom Transformation (SELECT) project of $155 million supports the Sindh Education Sector Plan & Roadmap (SESPR) 2019–2024 on prioritized areas of foundational literacy, teaching quality, access and proactive dropout mitigation (especially for girls’) and transition from primary to secondary schooling, and improved school and district-level governance which contribute to the achievement of its targets. The project focuses on 12 out of 29 districts in Sindh, which are identified based on six indicators as lowest performing districts in terms of educational outcomes and will benefit about 5.15 million students from grades 1 to 8. The new project builds upon the previous Second Sindh Education Sector Project that supported the Government of Sindh (GoS) to implement the Sindh Education Sector Plan 2014-2018 to improve governance and accountability in the education sector and benefited a cumulative 8.5 million students over the project period. The project also pioneered the Sindh School Monitoring System, for monthly monitoring of schools, including teachers’ biometric attendance monitoring,which has significantly reduced teacher absenteeism and been specifically useful in the development of the SESPR 2019-2024 and during the COVID-19 period.

As part of the Supporting Human Capital Investment in Sindh (SHCIS) project ($200 million overall; US$25 –30 million for education), currently under preparation, the GoS School Education and Literacy Department seeks to strengthen Early Childhood Education (ECE) and foundational learning systems in Sindh by: (a) improving the ECE quality and establishing a robust ECE quality assurance system; (b) strengthening and expanding the ECE labor force and establishing a system for school-level continuous professional development in ECE; (c) improving ECE monitoring data and systems; and (d) initiating activities to increase ECE access, which will be scaled up in later programs.

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 will fund the rehabilitation of schools and upgrading of primary schools to middle and high schools, merit-based hiring of additional teachers and strengthening the education sector stewardship.

The Balochistan Education Support Project (BESP) that closed in August 2021 was funded by the Global Partnership for Education (US$34 million) and the European Union (EUR10 million). The project focused on expanded access to quality education. It has helped to improve the infrastructure of 1,128 schools across the province, including 708 schools with new or renovated buildings, 200 with repaired facilities and 220 upgraded schools from primary to middle and middle to high. 169,503 children were enrolled in project-supported schools with an 81% retention rate of children, of which 82% are girls. Early Childhood Education (classes with trained teachers and ECE specific learning materials were set-up in project-supported schools. A total of 2,632 teachers were trained on pedagogy and subject content, and 5,927 community members around the school sites were trained to support the monitoring of school construction, ensure children’s participation in education and teachers’ presence in schools. In the wake of COVID-19, the project made necessary adjustments to support the Secondary Education Department in safe re-opening of schools across the province. The project provided essential supplies for safe re-opening and imparted training to teachers and cluster heads for implementation of COVID Standard Operating Procedures.

Khyber Pakhtunkhwa

In March 2021, the Government of Pakistan approved the $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 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 (300,000 students, 50% of which are girls). The project will also focus on strengthening community engagement and grievance redress mechanisms of the health and education sectors by supporting schools in promoting student health. The project was formally launched on March 16, 2022.

ENHANCING DISASTER RESILIENCE

Being one of the most climate-change vulnerable countries in the world and recurrently affected by catastrophes, including the unprecedented 2010 floods which affected over 20 million people, Pakistan’s economy has suffered 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 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 by 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 female. The project also repurposed US$ 7 million to support 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 $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 $ 200 million to scale up the small groundwater recharge dams component and setting up of an emergency rescue service for Sindh.

The Bank has also prepared and delivery the $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 project is expected to improve weather forecasting in Pakistan and facilitate sustainable management of around 80,000 hectares of forest area.

Further, as part of ongoing technical assistance, the Bank is engaged with federal and provincial governments to improve understanding of climate risks and green transition of the economy.

OPERATING IN CONFLICT AREAS

The 2009 conflict in Khyber Pakhtunkhwa (KP) and the erstwhile Federally Administered Tribal Areas (FATA) led to one of the worst security crises in Pakistan’s history, displacing an estimated two million people and severely disrupting lives, livelihoods, and the provision of public services.

A Multi-Donor Trust Fund (MDTF) was established in 2010 to support reconstruction and recovery from the impact of the crisis and reducing the potential for escalation or resumption. The MDTF has approximately $284 million in resources and is currently focusing on improving governance, creating jobs, and improving service delivery in Khyber Pakhtunkhwa and Balochistan. 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 was also a first responder to the COVID-19 crisis in Pakistan and helped with provision of emergency health equipment. 

Last Updated: Oct 07, 2022