On January 14, 2025, the World Bank board will approve a groundbreaking $20 billion loan for Pakistan. This marks the first-ever mega 10-year partnership framework, ensuring long-term stability in Pakistan’s development projects.
The new loan package called the “Pakistan Country Partnership Framework 2025-35,” focuses on six key areas. These areas have broad political support, ensuring they remain unaffected by the country’s political changes between 2025 and 2035. Over this period, three general elections are expected to take place.
The primary objective is to improve neglected sectors such as health, education, and climate change. A senior Pakistani official involved in negotiations noted that Pakistan was chosen as the first country for this 10-year framework.
According to the draft framework, the World Bank will lend around $20 billion between 2025 and 2035. Of this amount, $14 billion will come from the International Development Association (IDA), while the remaining $6 billion will be from the International Bank for Reconstruction and Development (IBRD). However, the availability of these loans depends on future IDA funding, Pakistan’s performance, and its debt vulnerability.
In addition to the $20 billion government loan, the World Bank will support $20 billion in private lending through the International Finance Corporation (IFC) and the Multilateral Investment Guarantee Agency (MIGA). This brings the total package to $40 billion, although only $20 billion will be official loans.
The World Bank’s new strategy marks a shift towards larger, more stable investments in key sectors. It will phase out support for less impactful sectors like transport, power transmission, telecom, and urban infrastructure. The IFC and MIGA will facilitate private investments to support these sectors.
The focus of the new framework will be on six critical areas. First, reducing child stunting through improved health, nutrition, and family planning, particularly for mothers and children. It aims to provide quality health services to 54 million people and support 18 million women using modern contraceptives.
Second, reducing learning poverty by improving school enrollment and attendance. The World Bank targets 12 million children, half of whom are currently out of school. Third, it will enhance climate resilience by addressing water, agriculture, and climate change, benefiting 78 million people.
Fourth, the World Bank plans to decarbonize the environment by promoting lower greenhouse gas emissions, particularly in energy. This will help reduce air pollution and generate 10 GW of renewable energy.
Fifth, the framework focuses on fiscal reform by improving revenue collection and rationalizing expenditure, aiming to increase Pakistan’s tax-to-GDP ratio to 15%.
Finally, the World Bank plans to boost private investment to enhance productivity, aiming to facilitate $20 billion in private capital.
The team will implement this ambitious plan through rolling business plans, reviewing them every two years to ensure steady progress in critical sectors. This 10-year framework will provide a much-needed boost to Pakistan’s economy while mitigating the impact of political volatility.
