World Bank proposes $300m package to drive Pakistan’s investment-led growth

The World Bank is preparing a $300 million financing package to help Pakistan shift from economic stabilisation toward investment-led growth, with a five-year reform programme focused on attracting private investment, increasing exports and generating employment.

 

According to a World Bank document, the proposed Pakistan Bold Reforms for Investment-Driven Growth and Employment Program (BRIDGE) will be implemented through a Program-for-Results (PforR) financing mechanism led by the Ministry of Finance.

 

The programme is scheduled for technical design review in September 2026, with approval by the World Bank's Board expected in January 2027.

 

The proposed $300 million package comprises $150 million from the International Bank for Reconstruction and Development (IBRD) and another $150 million from the International Development Association (IDA). Of the total, $270 million will finance the reform programme, while $30 million will be allocated as Investment Project Financing for technical assistance.

 

The World Bank said Pakistan has made significant progress in restoring macroeconomic stability under its ongoing IMF programme and is now required to move toward sustainable growth driven by private investment and exports.

 

However, the Bank noted that private investment remains around 10% of GDP, less than half the level recorded by regional peers, while foreign direct investment stands at only 0.6% of GDP.

 

It identified several structural constraints, including an unfavourable business environment, excessive regulations, limited access to financing, high trade costs and weaknesses in the labour market, as factors holding back productivity and private investment.

 

The BRIDGE programme will support the government's URAAN Pakistan reform agenda and aims to help increase private investment to 15% of GDP by 2035.

 

The reform programme will focus on three key areas.

 

The first involves reducing regulatory, financial and trade barriers by simplifying business regulations, improving access to finance for exporters and small and medium-sized enterprises, and reducing trade-related costs.

 

The second focuses on improving competitiveness in high-potential export sectors, including agribusiness, digital services and pharmaceuticals. Reforms will target sector-specific constraints, encourage private investment and improve access to international markets.

 

The third area focuses on labour-market reforms, including stronger vocational skills recognition, improved labour-market information systems and better alignment between workforce skills and industry requirements. The programme will also seek to strengthen overseas employment and migration pathways.

 

The World Bank said the PforR mechanism was selected because it links financing disbursements to measurable reform results rather than policy announcements alone. This approach is intended to strengthen government ownership, institutional capacity and accountability across participating ministries.

 

The Bank said a traditional Development Policy Financing approach was not selected because BRIDGE is designed around sustained implementation and measurable outcomes rather than one-time policy measures.

 

The technical assistance component has been assessed as carrying low environmental and moderate social risks. A broader Environmental and Social Systems Assessment will be undertaken during project preparation before implementation of the reform programme.