ISLAMABAD: The Executive Board of Directors of World Bank (WB) on Tuesday approved $800 million to finance two programs in Pakistan.
The programs include, Pakistan Program for Affordable and Clean Energy (PACE) and Second Securing Human Investments to Foster Transformation (SHIFT II).
WB Country Director for Pakistan Najy Benhassine said the reforms underpinning the two programs can contribute to facilitate sustainable investments and generate welfare gains for those most in need.
WB said $400 million project for clean energy focuses on measures to improve the financial viability of the power sector and support Pakistan’s transition to low carbon energy.
“PACE prioritizes actions needed to initiate critical power sector reforms focused on reducing power generation costs, better targeting of subsidies and tariffs for consumers, and improving efficiencies in electricity distribution with the participation of the private sector,” the statement said.
Additional medium-term reforms are under development, focusing on subsidies, competitiveness, and power sector sustainability. “The goal is to reduce circular debt over the long-term,” WB press release said.
WB task team leader for the program, Rikard Liden, said that power sector reforms were critical to resolving the country’s fiscal challenges.
“Decarbonizing the energy mix will reduce dependence on fossil fuel imports and vulnerability to price fluctuations because of movement in exchange rates. PACE prioritizes action on such reforms, which must be sustained to address circular debt and set the power sector on a sustainable path,” he said.
Meanwhile, the second $400 million supports a federal structure to strengthen basic service delivery for human capital accumulation. “The program will help improve health and education services, increase income generation opportunities for the poor, and promote inclusive economic growth,” the statement said.
WB said these reforms will increase budget reliability for sustainable financing of child immunization and quality primary healthcare program, promote student attendance and support data-driven decision-making.
“The program supports reforms to encourage women’s participation in the economy by improving working conditions and empowering those in the informal sector. It supports the enhancement of national safety nets programs and better targeting to protect the most vulnerable, building resilience to shocks like the Covid-19 pandemic,” WB press release said.
Tazeen Fasih, the WB task team leader for the SHIFT II program, said: “Strengthening services that build human capital in a coordinated manner between provincial and federal authorities, along with improved targeting of social safety nets, will better support families to recover from the Covid-19 crisis, and pave the way for more robust crisis preparedness in the future.”
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