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World Bank Group to Provide up to $5.5 billion to Pakistan for Next Three Years

December 22, 2011

Washington, December 22, 2011 – The World Bank Group (WBG) will continue to support Pakistan’s poverty reduction and development agenda with an expected assistance of up to $5.5 billion over the FY 12-14, according to the World Bank’s Country Partnership Strategy Progress Report (CPSPR) released here on Thursday. 

The progress report is a mid-term review and implementation assessment of the Pakistan CPS, which was discussed by the World Bank’s Board of Executive Directors on July 8, 2010. The report assesses changes in the program since the CPS Board discussion and proposes adjustments for the remaining implementation period. In consultation with the Government of Pakistan, the original CPS period has been extended by one year to include FY14.

“The Bank has responded flexibly in the face of the tremendous challenges Pakistan has gone through over the past year or so.  I am pleased that we have been able to support the emergency response to floods, launch a Multi-Donor Trust Fund (MDTF) for the crises-hit areas of Khyber Pakhtunkhwa, FATA and Balochistan, and deepen engagement with the provinces,” said Rachid Benmessaoud, World Bank Country Director for Pakistan. “Going forward, we will continue our strong support to Pakistan, while keeping a keen eye on implementation to ensure that these efforts translate into real results on the ground.”

The progress report says the overall focus of the Bank’s strategy - to help Pakistan’s economy get back onto a path of high, sustained growth - remains valid and consistent with the overall priorities of the Government of Pakistan as articulated in its New Framework for Growth Strategy.  Also, the Bank support will remain centred on the original pillars of the CPS -- economic governance; human development and social protection; infrastructure; and security and conflict risk reduction. The Bank Group engagement over FY12-14 is projected at up to $4.0 billion in new International Development Association (IDA) credits and International Bank for Reconstruction and Development (IBRD) loans. This will be supplemented by a robust program under the MDTF with initial commitments of US$140 million and International Finance Corporation (IFC) support projected at US$1.5 billion.

The Bank program will ensure continued attention to critical social services like education and health and safety nets for vulnerable populations to address any negative implications during a weak economic growth period.  In addition, the Bank will support transformational infrastructure programs, particularly energy (e.g. hydropower), which will help create jobs and restore long term growth. The Progress Report notes that while the Bank may not be able to provide budget support given weak conditions for macro-economic reform, it will remain engaged in supporting the Government in the critical issues of revenue mobilization and power reform through analytical work, ongoing projects, and exploring operations where disbursements are based on the achievement of results. Given increased frequency of natural disasters, the Bank will bring additional focus and assistance on the Disaster Risk Management agenda. The regional cooperation opportunities will also receive increased attention.

The Multi-Donor Trust Fund (MDTF) for Khyber Pakhtunkhwa, FATA and Balochistan is the Bank’s newest instrument for strategic engagement in the crises-hit regions.  The MDTF became effective on August 5, 2010 with grant support of 10 countries pledging $140 million. The focus of the first round of MDTF projects is on creating employment and livelihoods opportunities, emergency roads construction, strengthening governance, and revitalizing health services.

IFC has ramped up its program in Pakistan and has already made investments of over US$1.2 billion during the last two years. IFC aims to invest about US$500 million per annum in the private sector, 50% of which are expected to be in trade finance and the remaining focusing on renewable energy, infrastructure, financial sector, agribusiness, manufacturing and services. The Multilateral Investment Guarantee Agency (MIGA) will continue to support investments, complex infrastructure projects and crisis-affected areas.

"The significant increase in IFC's investments over the last few years demonstrates the great potential for a vivid private sector, which can create much needed jobs and help spur economic growth in the country,” said Mouayed Mahlouf, IFC Director for the Middle East and North Africa. "We are committed to helping Pakistan realize its potential especially in key sectors such as infrastructure, renewable energy and agribusiness."

The progress report notes that in addition to new lending and grant support, it will be equally important to ensure that the existing portfolio of 24 IDA/IBRD projects amounting to $3.7 billion and 38 IFC operations amounting to US$927 million, as well as the MDTF and MIGA programs are implemented effectively to achieve their development objectives. The Bank’s analytical and advisory program will remain central to our policy and sector dialogue. The Trust Funds program supported by various development partners will continue to be an important source of financing for exploiting synergies in important advisory and analytical activities.

The progress report cautions that macroeconomic, political and implementation risks in Pakistan have all increased, and in the event of a significant economic deterioration, the proposed strategy would need to be revisited.

Consultations with various stakeholders including public representatives, federal and provincial government officials, civil society, media and academia went into the preparation of the CPSPR.

About the World Bank Group

The World Bank Group is one of the world’s largest sources of funding and knowledge for developing countries. It comprises five closely associated institutions: the International Bank for Reconstruction and Development (IBRD) and the International Development Association (IDA), which together form the World Bank; the International Finance Corporation (IFC); the Multilateral Investment Guarantee Agency (MIGA); and the International Centre for Settlement of Investment Disputes (ICSID). Each institution plays a distinct role in the mission to fight poverty and improve living standards for people in the developing world.

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