Islamabad, January 4, 2025: The World Bank is preparing to approve a $20 billion 10-year lending package for Pakistan under the “Pakistan Country Partnership Framework 2025-35.” This globally unprecedented initiative focuses on six critical development areas, aiming to shield projects from political changes during a period expected to see three general elections. The programme is designed to address long-standing challenges in health, education, and climate resilience, with a goal to significantly improve social indicators by 2035. Specifically, it aims to reduce child stunting by 30% and cut learning poverty to below 60%.
Out of the total $20 billion, $14 billion will be provided by the World Bank’s concessional lending arm, the International Development Association (IDA), while the remaining $6 billion will come through the International Bank for Reconstruction and Development (IBRD). Additionally, private sector investment worth $20 billion will be facilitated by the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA), bringing the total financial package to $40 billion. However, the $20 billion in official loans will focus on fewer but larger projects, with reduced emphasis on small-scale pilots and one-off operations.
The new framework will phase out lending in sectors deemed less impactful, such as transport, power transmission, higher education, tertiary healthcare, and urban infrastructure. Instead, these areas will be supported through private investment facilitated by IFC and MIGA guarantees. The World Bank’s strategy marks a shift from short-term macro-fiscal adjustments to more selective, long-term investments in high-impact sectors essential for sustained development and growth.
According to the World Bank’s assessment, Pakistan’s economy remains vulnerable due to inconsistent macroeconomic policies, political volatility, and recurrent crises, such as the 2022 floods and global commodity price shocks. Despite these challenges, the country is slowly recovering, with the government pursuing a new round of fiscal, energy, and business environment reforms.
The framework’s first focus area is improving health and reducing child stunting by expanding health, nutrition, and family planning services, particularly for adolescent girls, mothers, and newborns. Over 54 million people are expected to receive quality health services, with 18 million women accessing modern contraceptives. The second area involves reducing learning poverty by increasing school enrollment and attendance, especially for girls, with a target to improve education for 12 million out-of-school children.
Climate resilience and sustainable resource management form the third pillar of the strategy, aiming to enhance food and water security for 17 million people while building resilience to climate risks for 78 million. Decarbonization, the fourth area, focuses on transitioning to low-carbon energy, reducing air pollution, and generating 10 GW of renewable electricity. The strategy also seeks to stabilize Pakistan’s fiscal framework by improving revenue collection and optimizing public spending, with a target to raise the tax-to-GDP ratio to 15% and increase spending on essential services for lower-income populations by 60%.
Finally, the framework emphasizes boosting private sector investment to drive economic growth, with a goal to mobilize $20 billion in private capital. Implementation of the plan will be guided by rolling two-year business plans, jointly developed by Pakistan and the World Bank. The framework is expected to be approved by the World Bank’s board on January 14, after which South Asia Vice President Martin Raiser will visit Islamabad to formalize the agreement.
By committing to long-term, high-impact projects, the World Bank aims to address Pakistan’s entrenched socio-economic challenges, ensuring continuity in development efforts despite potential political transitions.
