The World Bank has called on Pakistan to accelerate efforts to boost private investment, warning that current levels remain significantly below the targets outlined in the Country Partnership Framework (CPF) 2026–35. The issue was discussed during a meeting between Federal Minister for Finance and Revenue Muhammad Aurangzeb and the World Bank’s Pakistan Country Director Bolormaa Amgaabazar, where both sides reviewed ongoing collaboration and assessed progress on priority reforms under the CPF.
According to the World Bank, raising productive private investment is a central pillar of the CPF and is critical to lifting Pakistan’s investment-to-GDP ratio over the next decade. The Bank noted that a range of policy and institutional constraints continue to weigh on investment outcomes. These include extensive controls, subsidies, taxation structures, trade protection measures, and the large footprint of state-owned enterprises, all of which have constrained productivity, discouraged private capital formation, and weakened export competitiveness.
As a result, private investment in Pakistan remains around 10% of GDP, well below regional peers. In comparison, private investment levels stand at approximately 20–25% of GDP in countries such as India and Bangladesh. The Bank also highlighted a long-term decline in Pakistan’s export performance, noting that exports have fallen from about 16% of GDP in the 1990s to roughly 10% today.
To address these challenges, the World Bank proposed a results-based reform approach anchored in clear policy milestones, measurable indicators, and targeted technical assistance. The Bank stated that shifting toward a more open and export-led growth model could enable Pakistan to capture an estimated $60 billion in additional annual export potential, provided the business environment improves in a decisive and sustained manner.
During the meeting, the World Bank briefed the finance minister on progress under the CPF, including developments in fiscal and revenue reforms, macroeconomic stabilisation, and ongoing policy-based engagements. Both sides acknowledged recent gains in macroeconomic stability achieved through fiscal consolidation and monetary discipline, while emphasising the importance of translating stability into durable economic growth, higher investment levels, and employment generation.
Discussions also focused on the development of a programmatic investment framework aligned with CPF objectives. Key reform areas identified included improvements in the business environment, stronger governance of state-owned enterprises, enhanced trade facilitation, capital market development, and measures to strengthen export competitiveness. These reforms were seen as essential to crowding in private investment and improving resource allocation across the economy.
Finance Minister Muhammad Aurangzeb reaffirmed the government’s commitment to advancing structural reforms. He cited ongoing efforts in tariff rationalisation, regulatory modernisation, improved SOE governance, and transparency measures aimed at creating a more predictable and investor-friendly environment. He also highlighted the importance of deepening capital markets, expanding access to long-term financing, and strengthening institutional coordination to support private sector–led growth.
Employment and skills development featured prominently in the discussions. The finance minister underscored the need for market-driven vocational and technical training, stronger public-private collaboration, and better alignment of skills with both domestic and overseas labour demand. Particular emphasis was placed on sectors such as information technology, healthcare, nursing, hospitality, and construction, which offer significant employment and export potential.
The World Bank shared details of its ongoing work on labour mobility, skills matching, and the development of digital labour market platforms aimed at boosting productivity and expanding overseas employment opportunities. Sectoral priorities identified for potential future World Bank-supported operations included digital services exports, agriculture and agribusiness, minerals and mining, healthcare, and selected manufacturing segments. Both sides agreed that targeted sectoral interventions, supported by regulatory and institutional reforms, could deliver meaningful gains in employment and exports.
The Bank also discussed the potential use of policy-based guarantees in future operations to support liability management, refinancing of high-cost debt, and innovative financing solutions, subject to agreed policy milestones. Climate finance, regulatory streamlining, and coordination with provincial governments were also reviewed as part of the broader reform agenda.
Both sides agreed to continue technical-level engagements to refine priorities and advance preparation of future World Bank-supported programmes in line with Pakistan’s reform objectives and the CPF 2026–35 framework.
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