TAHIR AMIN

ISLAMABAD: The World Bank is preparing a USD 300 million financing package to support Pakistan’s transition from economic stabilisation to investment-led growth, backed by a five-year reform programme aimed at removing barriers to private investment, boosting exports and creating jobs through wide-ranging regulatory, financial, trade and labour-market reforms.

According to the World Bank’s document, the proposed “Pakistan Bold Reforms for Investment-Driven Growth and Employment Program (BRIDGE)” will be implemented through a Program-for-Results (PforR) financing instrument led by the Ministry of Finance.

The operation is scheduled for technical design review in September 2026 and Board approval in January 2027.

The total financing envelope stands at USD 300 million, comprising USD 150 million from the International Bank for Reconstruction and Development (IBRD) and USD 150 million from the International Development Association (IDA). The package includes a USD 270 million reform program alongside a USD 30 million Investment Project Financing (IPF) component to provide technical assistance.

The Bank noted that Pakistan has largely restored macroeconomic stability under the ongoing IMF programme and is now shifting its focus toward achieving sustainable economic growth driven by private investment and exports.

However, it observed that Pakistan remains trapped in a long-standing boom-and-bust cycle, with private investment stagnating at around 10 percent of GDP, less than half the level of regional peers, while foreign direct investment remains at only 0.6 percent of GDP. The Bank attributed this to an unfriendly business environment, burdensome regulations, limited access to finance, high trade costs, and weak labour market outcomes that continue to undermine productivity and discourage investment.

The proposed operation seeks to strengthen the business environment for private investment-led growth and job creation and supports the government’s reform agenda under URAAN Pakistan. It also aligns with the World Bank’s Country Partnership Framework and aims to help Pakistan increase private investment to 15 percent of GDP by 2035.

The reform programme has been structured around three key results areas.

The first area of focus is reducing regulatory, financial and trade barriers by simplifying business regulations, improving exporters’ and SMEs’ access to finance and lowering trade costs that constrain private sector investment.

The second aim is to improve competitiveness in high-potential export sectors, including agribusiness, digital services, and pharmaceuticals, through targeted reforms designed to attract private investment, remove sector-specific bottlenecks, and strengthen access to international markets.

The third component seeks to improve labour market functioning by strengthening vocational skills recognition, enhancing labour market information systems to better match skills with industry demand, and improving overseas employment pathways and migration processes.

The World Bank said the Program-for-Results financing instrument was selected because it links disbursements directly to the achievement of agreed reform outcomes rather than policy announcements alone, thereby strengthening government ownership, institutional capacity and accountability for implementation across multiple ministries. It added that a traditional Development Policy Financing approach was ruled out because the proposed operation emphasises sustained implementation and measurable results rather than one-off policy actions.

The Bank has assessed the environmental and social risk classification of the technical assistance component as low environmental and moderate social risk, while a comprehensive Environmental and Social Systems Assessment (ESSA) for the broader reform programme will be conducted during project preparation before its implementation.