Another $11bn worth of loans are expected at 2 percent interest rate as part of five-year agreement.
The World Bank said Friday it had approved a $1-billion loan for Pakistan and “envisages” another $11 billion package spanning five years.
The loans are meant to support Pakistan’s struggling energy sector and bolster its efforts to increase growth and investment and arrest poverty. They will carry a 2 percent interest rate.
“The World Bank Group approved a package of assistance worth $1 billion to support Pakistan’s economic reforms on Thursday,” the bank said in a statement. “The assistance package consists of two development policy credits (DPCs) to support the government of Pakistan’s efforts to improve the power sector, and reinvigorate growth and investment for reducing poverty and building shared prosperity,” it said.
The bank also said it was “envisaging” $11 billion worth of loans under a new country partnership strategy for Pakistan over the next five years, covering fiscal years 2015 to 2019.
The government, however, said the World Bank had approved the $11 billion partnership strategy to tackle its four main challenges of energy, economy, education and fighting extremism. “The other landmark achievement of the day was the approval of country partnership strategy under which Pakistan will get $11 billion in the shape of project loans and budgetary support,” it said.
Finance Minister Ishaq Dar has “congratulated the whole nation on this success and observed that the country partnership strategy is aligned fully with the vision of Pakistan’s development challenges around the four Es ‘Energy, Economy, Extremism and Education,’ based on the manifesto of the Pakistan Muslim League (N) and its commitment to the nation,” it said.
Philippe Le Houerou, vice president for the Bank’s South Asia region, praised Pakistan for stabilizing its economy and starting reforms in the power sector.
“The government of Pakistan deserves appreciation for stabilizing the economy, initiating reforms in the power sector as well as revenue mobilization and drawing in the private sector for spurring growth,” Le Houerou said in a statement.