World Bank approves $350 million for Pakistan under RISE-II

Operation meant to boost Pakistan’s economic resilience and strengthen fiscal policy

ISLAMABAD: The World Bank’s Board of Executive Directors has granted approval for $350 million in financing under the Second Resilient Institutions for Sustainable Economy (RISE-II) Operation. The initiative is designed to fortify fiscal management and foster competitiveness, with the ultimate goal of achieving sustained and inclusive economic growth.

Najy Benhassine, the World Bank Country Director for Pakistan, emphasized the urgent need for fiscal and structural reforms to restore macroeconomic balance and establish the groundwork for sustainable growth. “RISE-II completes a first phase of tax, energy, and business climate reforms geared towards raising additional revenues, improving expenditure targeting, and stimulating competition and investment,” Benhassine noted.

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RISE-II, part of the Resilient Institutions for Sustainable Economy initiative, receives support under the World Bank’s COVID-19 Crisis Recovery Facility. Co-financed with the Asian Infrastructure Investment Bank (AIIB), it aims to enhance Pakistan’s macroeconomic management and foster sustained, inclusive growth. The program focuses on mitigating the socioeconomic effects of COVID-19 and other shocks by providing external financing for critical policy reforms. 

These reforms target effective fiscal management, private sector investments, and regulatory frameworks to induce economic growth and reduce poverty. Earlier, the RISE series contributed to strengthening institutions, broadening tax bases, eliminating trade barriers, and rationalizing power sector subsidies.

The operation under RISE-II also addresses fiscal management through various strategis. These strategies include enhancing fiscal policy coordination, improving debt transparency and management, strengthening property taxation, and enhancing the financial viability of the power sector. Moreover, RISE-II aims to boost growth and competitiveness by reducing the cost of tax compliance, enhancing financial sector transparency, promoting digital payments, and facilitating exports through lower import tariffs.

Derek H. C. Chen, Task Team Leader of the operation, highlighted the pivotal opportunity for Pakistan to address longstanding structural distortions in its economy following the upcoming general elections. Chen cautioned that failing to seize this opportunity could risk pushing the country back into unpredictable economic cycles characterized by starts and stops.

The financing is not only expected to play a crucial role in supporting Pakistan’s economic resilience but is also a crucial forex injection ahead of what is expected to be another balance of payments crisis for the country.

Shahnawaz Ali
Shahnawaz Ali
The author is a Business and Finance journalist at Profit and can be reached via email at [email protected] and via twitter @shahnawaz_ali1

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