$20 Billion World Bank Lending May Fall Short: Pakistan Urged to Mobilise Resources

January 29, 2025 Mahi Bukhari

Pakistan Needs More Than $20 Billion for Sustainable Growth

ISLAMABAD:

The World Bank’s Vice President for South Asia, Martin Raiser, has emphasised that the $20 billion lending committed to Pakistan under the Country Partnership Framework (CPF) for 2026-35 may be insufficient to meet the country’s ambitious long-term development goals.

Raiser stressed that Pakistan must mobilise additional resources and attract private sector investment to effectively tackle its pressing economic and human capital challenges. His remarks came at the conclusion of a week-long visit aimed at reviewing Pakistan’s economic progress and discussing reform strategies.

“The World Bank Group’s support alone will not be sufficient to achieve the ambitious targets set forth. Attracting private sector investment by improving the business climate is thus the need of the hour,” – Martin Raiser.

This warning reflects the real financial gap Pakistan faces, as the $20 billion spread over ten years translates to a mere 0.5% of GDP annually—a figure far below what is necessary to drive long-term economic transformation.

World Bank Calls for Comprehensive Resource Mobilisation

Government, Private Sector, and Development Partners Must Collaborate

According to Najy Benhassine, World Bank Country Director for Pakistan, the $20 billion commitment should be seen as a starting point rather than a solution. He highlighted the urgent need for additional funding from government resources, the private sector, and international development partners to ensure long-term planning and sustained economic progress.

“Pakistan spends only half on education compared to what countries with similar economies allocate. This underinvestment directly impacts long-term growth and development,” – Najy Benhassine.

Benhassine further stressed that chronic issues in Pakistan’s education system, energy sector, and fiscal management act as major roadblocks to sustainable development.

Critical Challenges Identified by the World Bank

Education Crisis: One-third of Pakistani children are out of school, with only one in four girls aged 14-15 attending secondary education.
Learning Poverty: 75% of students cannot read basic texts, severely limiting future workforce productivity.
Energy Inefficiency: High system losses and electricity costs hinder industrial growth and exports.
Recurring Fiscal Crises: Pakistan frequently faces budgetary shortfalls, impacting its ability to fund essential development projects.

Benhassine warned that unless these fundamental structural issues are tackled, economic growth will remain sluggish, and social inequality will persist.

Implementation of Country Partnership Framework (CPF) Critical for Progress

Federal and Provincial Governments Must Align Efforts

The Country Partnership Framework (CPF) for 2026-35 was officially launched by Prime Minister Shehbaz Sharif alongside Martin Raiser during his visit. The CPF aims to achieve six strategic development objectives, aligning with the government’s National Economic Transformative Plan (Uraan Pakistan).

“The CPF marks an important evolution in our engagement. It provides clear, tangible, and ambitious 10-year targets to drive Pakistan’s long-term development,” – Martin Raiser.

The success of the CPF depends on:

Strengthened collaboration between the federal and provincial governments.
Effective revenue mobilisation to reduce reliance on external funding.
Increased efficiency in government spending to ensure better public services.

Raiser held meetings with top government officials, including:

Prime Minister Shehbaz Sharif
Deputy Prime Minister & Foreign Minister Mohammad Ishaq Dar
Minister for Energy & Water Resources Musadik Masood Malik
Minister of State for Finance Ali Pervaiz Malik
Punjab Chief Minister Maryam Nawaz Sharif
Khyber-Pakhtunkhwa Chief Minister Ali Amin Gandapur

These discussions focused on how Pakistan can accelerate reform implementation under the CPF and secure additional international investments.

Key Focus Areas of the CPF 2026-35

The World Bank’s CPF aims to tackle some of Pakistan’s biggest socio-economic challenges, focusing on:

1. Strengthening Human Capital

Expanding access to quality education and healthcare.
Addressing gender disparities in education and employment.
Reducing learning poverty rates and improving vocational training.

2. Promoting Private Sector-Led Growth

Improving the business climate to attract foreign direct investment (FDI).
Reducing barriers to entrepreneurship and supporting small businesses.
Enhancing infrastructure to boost industrial output and exports.

3. Ensuring Sustainable Energy Development

Reducing electricity system losses to make power more affordable.
Promoting renewable energy projects to ensure energy security.
Improving governance in the energy sector to attract private investments.

4. Strengthening Fiscal Resilience

Broadening the tax base and enhancing revenue collection mechanisms.
Reducing budget deficits through effective fiscal management.
Minimising external borrowing to enhance economic independence.

5. Enhancing Climate Resilience & Disaster Preparedness

Investing in disaster risk reduction strategies.
Improving water resource management to combat climate change effects.
Promoting eco-friendly policies to mitigate environmental degradation.

6. Improving Governance & Institutional Capacity

Strengthening anti-corruption frameworks.
Enhancing public sector efficiency to improve service delivery.
Ensuring transparent decision-making for policy consistency.

Pakistan’s Economic Challenges & the Road Ahead

Despite the optimism surrounding the CPF, the biggest challenge remains ensuring effective implementation. Pakistan’s historical struggle with policy execution means that strong political will and governance reforms are necessary.

Martin Raiser and World Bank officials have reiterated that Pakistan’s ability to attract private investment will determine the success of its long-term economic strategy.

Without major structural changes, even $20 billion in aid will not be enough to bring about meaningful economic progress.

Key Takeaways for Pakistan

✅ Mobilising domestic and international resources is crucial.
✅ Improving the business environment will encourage private investment.
✅ Investing in education & human capital will drive long-term growth.
✅ Energy sector reforms are critical for economic competitiveness.
✅ Consistent policy execution will define Pakistan’s development trajectory.

Frequently Asked Questions (FAQs)

1. Why is $20 billion not enough for Pakistan’s development?

The amount translates to just 0.5% of GDP per year, which is insufficient to address critical challenges in education, energy, infrastructure, and governance.

2. What are the main objectives of the World Bank’s CPF for Pakistan?

The Country Partnership Framework (CPF) 2026-35 focuses on education, private sector growth, energy security, fiscal reforms, climate resilience, and governance improvements.

3. How can Pakistan attract more private investment?

By improving its business environment, simplifying regulations, reducing corruption, and ensuring policy stability to build investor confidence.

4. What are the biggest obstacles to Pakistan’s economic growth?

Key obstacles include low education funding, inefficient taxation, energy sector mismanagement, frequent fiscal crises, and poor policy execution.

5. What role do provincial governments play in CPF implementation?

Provinces are responsible for implementing education, health, infrastructure, and governance reforms, making their cooperation essential for the framework’s success.