Media Contacts: In Islamabad: Shahzad Sherjeel (051) 9090100 ssharjeel@worldbank.org In Washington: Jan Erik Nora (202) 473 5105 enora@worldbank.org WASHINGTON, March 26, 2009 ─ The World Bank today approved a US$500 million interest free IDA credit to support the Government of Pakistan’s program to regain and maintain economic stability and to bring the economy back to a higher growth path. Pakistan has experienced severe external and internal shocks in the past year and is confronting a very difficult macroeconomic situation. The rise in international oil and food prices sharply inflated the country’s import bill and the subsequent slowdown in the global economy dampened external demand for Pakistan’s exports. On the internal side, political turmoil and uncertainties affected investor confidence which, together with macroeconomic imbalances, led to capital outflows. The Poverty Reduction and Economic Support Operation is designed to support Government of Pakistan’s policy measures that promote macroeconomic stability. It also seeks to strengthen Pakistan’s competitiveness by bolstering the financial sector and cutting barriers to business entry and exit. “The Government of Pakistan has taken important policy steps to stabilize the economy,” said Yusupha Crookes, World Bank Country Director for Pakistan. “These polices have succeeded in reducing external imbalances, rebuilding foreign exchange reserves, narrowing fiscal overruns, and lowering inflation. However, the sharp deterioration of the global economy poses significant risks to exports, remittances, and external financing. This underlines the importance of Pakistan regaining economic stability and protecting its poorest citizens during the process.” The operation also supports measures to ensure that poor and vulnerable people are shielded from major adverse impacts of the stabilization process. This entails improving the targeting of the government’s cash transfer programs, focusing especially on the Benazir Income Support Program. “Protecting the country’s poor and vulnerable people is essential during the stabilization process,” said Satu Kahkonen, World Bank Lead Country Economist for Pakistan. “One of the key goals of this operation is to improve access to social safety nets for the poorest 25 percent of the population.” The reform program supported by this operation is based on the Government’s recently adopted Second Poverty Reduction Strategy Paper. The credit from the International Development Association (IDA), the World Bank’s concessionary lending arm, carries a 0.75% service fee, a 10-year grace period, and a maturity of 35 years. For more information on the Bank’s work in Pakistan, please visit: http://www.worldbank.org.pk |
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