Prime Minister Shehbaz Sharif welcomed a $40 billion “investment” by the World Bank on Monday, stating that the inflow will open “a new chapter” in various sectors of the economy, according to a statement issued by his office.

In January, an official statement announced that the World Bank pledged to provide $20bn to Pakistan under a 10-year country partnership framework (CPF) to support inclusive and sustainable development within the country.

According to the statement from Prime Minister House, PM Shehbaz welcomed a delegation of nine World Bank executive directors in Islamabad today.

“Under the World Bank’s recent Country Partnership Framework, an investment of $40bn will be made in Pakistan, which is welcome,” the statement quoted the prime minister as saying.

“With the support of the World Bank, several major projects were built in Pakistan for national development and reconstruction, which played an important role in Pakistan’s development,” he added.

The PM further said that Pakistan benefitted from its partnership with the World Bank, as it provided support to the country in the aftermath of the devastating floods of 2022 and supported multiple development projects.

According to the statement, PM Shehbaz said that $20bn will be invested into Pakistan’s private sector under the International Finance Corporation, while $20bn will be used to open “a new chapter of development … in various sectors, including health, education, youth development and others”.

“I am grateful for the World Bank’s confidence in our government’s policies,” the PM said. “The country’s programme for institution and economic reform is progressing swiftly, while the economy is heading in the right direction.”

PM Shehbaz noted that there was still a way to go to achieve sustainable economic development, adding that any credit for the improvement must go to his team.

Members of the delegation appreciated Pakistan’s reform programme and noted that it was yielding positive results, calling it a “positive development”.

“Pakistan’s journey towards economic reform is progressing swiftly under the leadership of the Prime Minister,” the World Bank delegation was quoted as saying. The statement added that the delegation will discuss investments and economic development projects during their visit.

In an interview with Nikkei Asia on February 14, Najy Benhassine, World Bank country manager for Pakistan, described the CPF as “not a loan program alone” but rather a “comprehensive engagement”.

“We provide technical assistance, advisory services and analytical support alongside financing,” he added.

The CPF is designed as a long-term approach with the flexibility to adjust to evolving circumstances and shocks.

Although the size and ambition of World Bank Group funding for the CPF is estimated at around $30-40bn over 10 years, project documents suggest that the actual lending envelope for FY26-35 will total around $20bn.

Of this, around $14bn will come from International Development Association (IDA) funding. The bank has recently achieved the replenishment target of $100bn under IDA21, and the $14bn figure is based on the assumption that the funding available in the coming cycles remains constant in real terms and about the average of IDA18, IDA19, and IDA20 amounts.

These are the funds available to the association, committed by donors who meet every three years to replenish IDA resources and review its policy framework.

A second component derives from International Bank for Reconstruction and Development (IBRD) funds, which are estimated at around $6bn. These depend on country demands, overall macroeconomic performance, global economic/financial developments that affect IBRD’s financial capacity, and demands by other borrowers.

The IBRD is the lending arm of the World Bank Group and is one of the two international financial institutions — alongside the International Monetary Fund — established by the Bretton Woods agreement after the second World War.

According to the bank, IBRD has provided over $48.3bn in assistance since 1950, and the bank’s current portfolio includes 106 projects and a total commitment of $17bn in Pakistan.

Progress report

According to the statement, the PM apprised the delegation about the progress of Pakistan’s economic reforms, stating that there were positive developments.

“Our exports and remittances are increasing,” he said. “Investment in manufacturing has risen due to low interest rates and to control corruption, work on digitisation in the FBR (Federal Board of Revenue) is continuing on a priority basis.”

PM Shehbaz also added that in the power sector, the country has experienced an “uninterrupted power supply” alongside a deficit reduction.

The PM continued: “Through SIFC (Special Investment Facilitation Council), we have created an attractive environment for investors. This unique system involves all stakeholders.”