The World Bank has agreed to provide a USD 1.336 billion loan to help Pakistan to the cash-strapped nation raise its foreign exchange reserves and finance social sector programs.
According to Pakistan’s Dawn newspaper, six project agreements worth a total of USD 1.336 billion in loans were signed on Friday to finance the government’s initiatives in the social welfare, catastrophe, and environmental risk management, developing facilities for resilience, agriculture, food security, human resource growth, and governance sectors.
Noor Ahmad, Secretary of the Ministry of Economic Affairs, signed the funding agreements on behalf of the Pakistani government, while delegates from Sindh, Khyber Pakhtunkhwa, and Balochistan signed their agreements online.
The World Bank’s Country Head, Najy Benhassine, signed the agreements on behalf of his agency. Minister of Economic Affairs Khusro Bakhtyar was also in attendance.
According to a Pakistani newspaper, the first USD 600 million loan arrangement was for the Crisis-Resilient Social Protection Programme (CRISP), which seeks to promote the implementation of a more adaptive social protection scheme that will help poor and disadvantaged households in the country withstand future crises.
The loan was signed a day earlier by the bank’s board of executive directors under the International Development Association (IDA) program.
Najy Benhassine said, Millions of families across Pakistan are facing economic hardship as a result of the COVID-19 pandemic, especially those employed in the informal sector, who lack savings or are not protected by established social safety net programs.
Via a creative, hybrid approach that combines social assistance with the promotion of increased savings that informal workers, especially women, can rely on in the event of economic shocks, the CRISP can encourage the incremental extension of Ehsaas social security programs to better meet informal workers.
During an economic downturn, it would offer a forum for the government to effectively respond and assist the neediest households.
After approving four pending assessments of Pakistan’s economic development earlier this week, the International Monetary Fund (IMF) decided to release the next tranche of a USD 500 million loan to the government.
For the first time in 68 years, Pakistan’s economy contracted by 0.38 percent in the previous fiscal year, owing to the negative effects of the COVID-19 pandemic, which was compounded by the country’s already precarious financial condition before the pandemic struck.
