By Staff Reporter
ISLAMABAD: The World Bank said its board of executive directors approved a $350 million loan for Pakistan to support the country’s efforts to improve fiscal management and boost competitiveness.
The loan is part of the second phase of the Resilient Institutions for Sustainable Economy (RISE-II) operation, which aims to help Pakistan address its macroeconomic imbalances and structural challenges.
“Pakistan needs urgent fiscal and structural reforms to restore macroeconomic balance and lay the foundations for sustainable growth,” Najy Benhassine, the World Bank’s country director for Pakistan, said in a statement on Tuesday. “RISE-II completes a first phase of tax, energy, and business climate reforms geared to raising additional revenues, improve the targeting of expenditures, and stimulate competition and investment.”
The operation will support Pakistan’s efforts to improve fiscal policy coordination, enhance debt transparency and management, strengthen the taxation of property, and improve the financial viability of the power sector. It will also help the country reduce the cost of tax compliance, improve financial sector transparency, encourage the use of digital payments, and promote exports by lowering import tariffs.
“Based on the foundations laid through RISE II and parallel support by other IFIs, Pakistan has the opportunity to tackle long-standing structural distortions in its economy after the upcoming general elections,” Derek H. C. Chen, the task team leader of the operation, said. “Failing to use this opportunity would risk plunging the country back into stop-and-go economic cycles.”
Pakistan is facing a challenging economic situation amid high inflation and weak external accounts, which has exacerbated its fiscal and external vulnerabilities. The country entered a $3 billion bailout short-term standby program with the International Monetary Fund in July this year, but analysts said Islamabad would need longer IMF support after March 2024 when the newly elected government takeover following February 8, polls.
The World Bank said it remains committed to supporting Pakistan’s economic recovery and resilience, and urged the authorities to implement the necessary reforms to achieve inclusive and sustainable growth.
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