Pakistan has secured its inaugural long-term World Bank partnership (2026-2035), promising an initial $20 billion in funding across six key sectors over the next decade. Concurrently, Pakistan appears to have successfully navigated a balanced foreign policy approach between the United States and China.
The establishment of this 10-year partnership with the World Bank, coupled with the delicate equilibrium maintained in relations with both U.S. and China, suggests that Pakistan’s leadership is actively seeking to align the nation’s trajectory with the evolving global landscape.
The Country Partnership Framework (CPF) with the World Bank outlines a ten-year development strategy (2026-2035) for Pakistan, with an initial commitment of approximately $20 billion. This ambitious plan prioritizes six key development goals:
1) Addressing child stunting: By enhancing access to clean water, sanitation, basic healthcare, nutrition, and family planning services, 2) Combatting learning poverty: Through the provision of high-quality foundational education. 3) Building climate resilience: By mitigating the impact of floods and other climate-related disasters, and ensuring food and nutrition security despite the adverse effects of climate change on water resources and agriculture. 4) Transitioning to clean energy: By promoting cleaner and more sustainable energy sources and improving air quality. 5) Expanding fiscal space: By optimizing public expenditure management and implementing more progressive public spending policies to bolster development. 6) Fostering inclusive economic growth: By stimulating productive and inclusive private investment, particularly to enhance external trade balances and achieve higher, more sustainable economic growth.
The World Bank statement emphasizes that these outcomes will be facilitated by cross-cutting interventions in social safety nets and financial inclusion to support and protect the most vulnerable populations, particularly women, alongside improved digital and transport connectivity.
Furthermore, a crucial aspect of this partnership lies in ensuring that projections for economic growth and industrial revival are realistic. This is essential to prevent the country from facing unmanageable economic crises between now and 2035.
Pakistan is currently prioritizing Gulf countries as key sources of foreign investment. Simultaneously, the country aims to unlock greater trade potential with China, Bangladesh, Japan, South Korea, Singapore, Indonesia, Malaysia, and Iran. Notably, Pakistan has also indicated a willingness to normalize trade relations with India under specific conditions.
Navigating the current economic landscape necessitates a two-pronged approach: immediate measures such as securing debt rollovers and long-term initiatives like diversifying trade towards eastern markets and streamlining government operations. While these steps are crucial for short-term stability, achieving sustainable long-term development hinges on prioritizing three critical areas: ensuring food security, empowering women, and fostering financial inclusion.
A significant portion of Pakistan’s population, approximately 22% or 52.8 million people, are facing high levels of food insecurity, according to a recent report in Dawn citing the Ministry of National Health Services. This alarming statistic highlights a critical challenge for Pakistan’s economic sustainability. A country heavily reliant on food exports cannot achieve long-term export growth while a substantial portion of its population struggles with food shortages.
Periods of increased food exports often lead to a surge in domestic food prices within Pakistan. This price inflation makes basic food items inaccessible for millions of citizens, exacerbating the existing food security crisis. The government faces a critical challenge: balancing the need to boost export revenue with the imperative of ensuring affordable food supplies for its own population. Addressing this issue must be a top priority. The government needs to implement strategies that mitigate the impact of food exports on domestic prices while supporting the growth of the agricultural sector.
Women in Pakistan represent a significant untapped potential for economic growth, yet systemic barriers severely limit their participation in the workforce.
While women constitute slightly more than half of the population, their labor force participation rate is a mere 25.4%, a stark contrast to the 83.7% participation rate of men, according to World Bank data. This disparity is primarily attributed to limited access to education, societal restrictions on mobility, and the lack of safe and supportive work environments for women. Addressing these barriers is crucial for empowering women to fully contribute to Pakistan’s economic growth.
Women’s political representation remains low, with only 20.5% of parliamentary seats held by women as of February 2024. Increasing women’s participation in decision-making roles at all levels of government is essential for ensuring that policies effectively address gender disparities and empower women in all aspects of life.
Pakistan lags significantly behind its regional counterparts in terms of financial inclusion, ranking just above war-torn Afghanistan. Only 13% of women in Pakistan have access to financial accounts, compared to 34% of men. This stark disparity in financial inclusion mirrors the broader structural barriers that hinder women’s economic empowerment in Pakistan.
To address the critical issue of low female financial inclusion, the Asian Development Bank (ADB) approved a $155.5 million financing package in 2024. This funding will support a range of reforms designed to expand women’s access to financial services. Key initiatives include microcredit programs for women entrepreneurs, the development of mobile banking solutions, and the implementation of comprehensive financial literacy programs. By facilitating greater female participation in the financial system, Pakistan can unlock substantial economic growth potential and effectively combat poverty.
Pakistan stands at a critical juncture. By prioritizing economic reforms, including a realistic assessment of growth projections, diversifying trade partnerships, and streamlining government operations, the country can navigate current economic challenges. Implementing comprehensive policy reforms to address its multifaceted challenges is the need of the hour. This includes prioritizing food security, empowering women through increased participation in the economy and political spheres, enhancing financial inclusion, and fostering a conducive environment for private sector investment.
The road ahead for Pakistan is fraught with challenges, demanding a pragmatic and output oriented assessment of its economic trajectory, and a commitment to addressing deep-seated social inequalities.