World Bank’s Board of Executive Directors granted approval on Wednesday for $350 million in financing dedicated to supporting fiscal and competitiveness reforms in Pakistan. The funding is allocated for the Second Resilient Institutions for Sustainable Economy (RISE-II) Operation, with a focus on fortifying fiscal management and fostering competitiveness for sustained and inclusive economic growth, according to a statement from the World Bank.
Najy Benhassine, World Bank Country Director for Pakistan, emphasized the critical need for urgent fiscal and structural reforms in Pakistan. The RISE-II Operation represents a continuation of initial reforms in tax, energy, and business climate aimed at generating additional revenues, enhancing expenditure targeting, and stimulating competition and investment.
The World Bank outlined that the RISE-II Operation contributes to improved fiscal management by enhancing fiscal policy coordination, increasing debt transparency and management, fortifying property taxation, and enhancing the financial viability of the power sector.
Furthermore, the operation seeks to boost growth and competitiveness by reducing the cost of tax compliance, improving financial sector transparency, promoting digital payments, and encouraging exports through lower import tariffs.
Derek H. C. Chen, Task Team Leader of the operation, highlighted the opportunity for Pakistan to address long-standing structural distortions in its economy post the upcoming general elections. Failure to seize this opportunity, he cautioned, could risk the country reverting to stop-and-go economic cycles.
In a recent report, the World Bank projected a decline in remittance flows to Pakistan, citing economic turmoil sparked by a balance of payment crisis and high debt. The report indicated a potential drop to $24 billion in 2023 and further decreasing below $22 billion with a 10% decline in 2024, emphasizing the impact on remittance channels from formal to informal due to a loss of public confidence.
