World Bank signals economic stabilisation in Pakistan

The World Bank announced on Friday that economic stabilisation is “taking hold” in Pakistan, marking an opportune moment to sign an agreement for a ten-year development plan.

The plan will focus $20 billion in development lending to the cash-strapped country under the new Country Partnership Framework, which was announced last month. The funding will be directed towards areas such as clean energy and climate resilience from 2026 onwards.

Najy Benhassine, the World Bank’s Country Director for Pakistan, said in a video message on X, “This is an important moment for the partnership between the World Bank Group and Pakistan as we engage on this journey at a particular moment for Pakistan where stabilization is taking hold and there are new ambitions and new plans for development on the long term that are very aligned with the priorities of the World Bank Group in the country.”

He further stated, “This is a groundbreaking joint commitment with the government of Pakistan both at the federal and provincial level to commit to focus on six of the most acute development challenges that the country is facing.”

The World Bank’s lending will start in 2026, targeting six key areas: improving education quality, addressing child stunting, boosting climate resilience, enhancing energy efficiency, fostering inclusive development, and increasing private investment.

According to the finance ministry’s monthly outlook report, Pakistan’s consumer inflation is expected to remain stable in February and continue its downward trend compared to the previous year.

Inflation has eased, with the Consumer Price Index (CPI) registering at 2.4% in January, compared to 24% during the same period last year. Authorities have attributed this improvement to economic stabilization under the IMF program secured last summer.

The report also highlighted that foreign remittances, a vital component of Pakistan’s economy, are expected to rise. “Workers’ remittances recorded robust inflows of $20.8 billion during July-Jan FY2025, marking a 31.7% increase over $15.8 billion last year,” the ministry stated.

An IMF mission is scheduled to arrive in Islamabad next week for the first review of Pakistan’s IMF facility. The finance ministry expects the primary surplus to improve further in the coming months, a key benchmark outlined by the IMF.