In a significant move to support Pakistan’s fragile economy, the World Bank’s Board of Executive Directors has approved $700 million in financing under a multi-year initiative aimed at strengthening macroeconomic stability and improving public service delivery.
The funding is part of the Public Resources for Inclusive Development – Multiphase Programmatic Approach (PRID-MPA), a comprehensive framework that could provide up to $1.35 billion in total financing over several phases. Of the current $700 million tranche, $600 million is allocated for federal programs, while $100 million is earmarked specifically for provincial initiatives in Sindh.
Strengthening Fiscal Foundations
The PRID-MPA is designed to enhance the quality of public spending and leverage digital tools to improve governance. It aligns with Pakistan’s ongoing fiscal reforms under the International Monetary Fund (IMF) Extended Fund Facility (EFF) and the National Fiscal Pact.
Bolormaa Amgaabazar, World Bank Country Director for Pakistan, emphasized the importance of domestic resource mobilization. “Pakistan’s path to inclusive, sustainable growth requires mobilizing more domestic resources and ensuring they are used efficiently and transparently to deliver results for people,” she stated.
She added that the program aims to provide more predictable funding for essential services like schools and clinics while safeguarding social and climate-related investments.
Targeted Federal and Provincial Reforms
According to the World Bank, the federal component of the program will focus on:
- Revenue Generation: Implementing fairer tax policies and administration reforms to broaden the tax base.
- Budget Execution: Scaling the Integrated Financial Management Information System (IFMIS) and e-procurement platforms to ensure transparency.
- Data-Driven Decisions: Strengthening the national statistical system led by the Pakistan Bureau of Statistics (PBS).
- Subsidy Reforms: Undertaking targeted reforms to reduce fiscal leakage and improve efficiency.
In Sindh, the program expects to increase provincial revenues and enhance the transparency of payments through the use of data-guided decision-making.
Expert Insights
Tobias Akhtar Haque, World Bank Lead Country Economist for Pakistan, highlighted that strengthening fiscal foundations is “essential to restoring macroeconomic stability and strengthening institutions.”
He noted that the PRID-MPA launches a “coherent nationwide approach” to expand fiscal space and bolster investments in human capital and climate resilience.
Economic Context
The approval comes at a critical time as Pakistan works to stabilize its economy following years of volatility. While the current account has recently shown signs of improvement and foreign exchange reserves have been shored up by multilateral disbursements, the country still faces structural challenges.
A recent joint report by the IMF and World Bank pointed to fragmented regulation and “political capture” as lingering barriers to investment. This latest World Bank financing serves as a results-based lifeline, with disbursements tied to the achievement of specific program objectives, ensuring accountability in the reform process.
This $700 million approval follows a $47.9 million grant provided by the World Bank in August 2025 specifically for primary education reforms in Punjab, signaling a sustained commitment from the lender toward Pakistan’s social and economic development.
