ISLAMABAD: The World Bank has urged Pakistan to adopt a results-driven strategy in securing a multibillion-dollar loan to support the country’s struggling power sector, according to sources cited by The News. The recommendation comes as Pakistan seeks to refinance its expensive energy sector debt, reduce financial pressures, and introduce targeted reforms aimed at improving operational efficiency, governance, and overall sector sustainability.
The energy sector in Pakistan, encompassing both power and gas industries, has faced long-standing financial challenges. Persistent circular debt, high-cost power generation contracts, and operational inefficiencies have placed enormous strain on public finances. The World Bank advised that any financial support should be evaluated in its entirety, with comprehensive measures introduced to address systemic weaknesses, ensure debt sustainability, and restore the sector’s fiscal health.
Government sources confirmed that Pakistan has formally approached the World Bank to refinance its power sector debt, aiming to replace costly loans with more affordable multilateral financing. This effort is intended to ease the pressure on the national budget and improve liquidity within the sector. In addition, the government plans to expand the incremental electricity package for industries from 25 percent to 50 percent, a move aimed at supporting businesses that experienced reduced electricity consumption during the previous fiscal year, largely due to contraction in Large Scale Manufacturing.
Federal Minister for Finance and Revenue, Senator Muhammad Aurangzeb, held high-level discussions with the World Bank Country Director for Pakistan, Bolormaa Amgaabazar, at the Finance Division. The discussions involved senior officials from both sides, reviewing ongoing collaboration, assessing sectoral priorities, and aligning Pakistan’s energy and economic policies with the World Bank’s Country Partnership Framework. Both parties recognized Pakistan’s recent progress toward macroeconomic stability achieved through disciplined fiscal and monetary policies. However, the World Bank stressed that such stability must be translated into tangible outcomes, including sustainable economic growth, higher investment, and job creation.
Sectoral priorities identified for potential World Bank-supported interventions include digital services exports, agriculture and agribusiness, minerals and mining, healthcare, and select manufacturing segments. Both sides agreed that targeted interventions, supported by regulatory and institutional reforms, could deliver high-impact results in employment generation, export growth, and private sector development.
The World Bank’s guidance underscores the importance of adopting a results-oriented approach, emphasizing measurable outcomes over nominal commitments. For Pakistan, this means focusing on governance reforms, transparent regulatory frameworks, and a coordinated strategy for the energy sector to ensure that refinancing efforts yield long-term benefits. The World Bank’s approach also highlights the need for careful monitoring and evaluation of reform progress, ensuring that sectoral interventions are implemented efficiently and deliver the intended economic impact.
As Pakistan moves forward with the refinancing plan and sectoral reforms, the results-driven approach recommended by the World Bank could serve as a blueprint for achieving both financial stability and sectoral efficiency. By implementing reforms and strategically leveraging multilateral support, Pakistan aims to reduce the burden of high-cost energy debt, improve investor confidence, and foster sustainable economic growth across key sectors.
The engagement with the World Bank reflects the government’s broader commitment to structural reforms, including improved energy sector governance, enhanced private sector participation, and stronger fiscal discipline. By focusing on outcomes rather than inputs, Pakistan seeks to ensure that multibillion-dollar loans are effectively utilized, contributing not only to short-term liquidity relief but also to the long-term development and modernization of the country’s energy infrastructure.
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