WB assures Pakistan support for reforms, digitalization programmes

The World Bank (WB) has assured Pakistan of its full support for reforms and digitalization programmes to stabilize the economy and enhance revenues.

According to a press statement issued by the finance ministry, Minister for Finance and Revenue Muhammad Aurangzeb, met with President World Bank Group Ajay Banga and highlighted Pakistan’s progress under the nine-month Standby Arrangement (SBA) program and ongoing reforms in priority areas of taxation, energy and privatization.

Both sides agreed on the need for a rolling Country Framework Plan for 10 years, the statement said adding the minister also invited the president to visit Pakistan.

The minister also met with the Asian Development Bank (ADB) president, Masatsugu Asakawa, and discussed further strengthening Islamabad's partnership with the ADB, protecting the country's envelope of concessional financing and future project pipeline.

The finance minister also met with the Chief Executive Office, US International Development Finance Corporation (DFC) Scott Nathan. During the meeting, they explored ways for the expansion of DFC’s investments in Pakistan following the amicable resolution of outstanding issues.

Read Pakistan seeks investment, not loans

The minister informed that the government was encouraging innovative financing models to leverage private sector investment and PPP potential. He assured that the government was committed to extending all possible support to investment initiatives by any local/ foreign investors in Pakistan, the statement added.

Earlier this month, the Board of Executive Directors of the WB approved financing of $149.7 million for the 'Digital Economy' and 'Flood Prevention' projects of Pakistan, aimed at improving economic efficiency, coordination and transparency and prevention of floods in the future.

According to the World Bank, $78 million has been allocated for the ‘Digital Economy Enhancement Project’, which will improve the financial system through technology and data-based decision-making, as supporting a growing digital economy in Pakistan is the key to economic and social development.

Separately, $71.7 million has been allocated for the improvement project of Sindh barrages to ensure flood protection. The project will increase the resilience of the canal system and reduce the adverse effects of extreme flood and drought events.

The World Bank forecasts that the inflation rate will remain at 26% in the current fiscal year 2023-24, but anticipates a decrease to 15% in the subsequent fiscal year 2024-25, further dropping to 11.5% in 2025-26.

According to documents, the World Bank notes that inflation in Pakistan during the first six months of the current fiscal year has hit its highest since 1974, attributing the significant increase in production costs to the surge in electricity and gas prices.

The World Bank underscores that the primary cause of the inflation hike in Pakistan is the escalation in electricity and gas prices.