The World Bank In Pakistan

Poverty has increased slightly amid recent shocks, despite some economic stabilization. Pakistan made significant progress towards reducing poverty between 2001 and 2018 with the expansion of off-farm economic opportunities and increased external remittances. However, this has not fully translated into improved socio-economic conditions: over one-third of school-age children across Pakistan were found to be out of school; nearly two-thirds of those in school in FY24 were learning deprived; and high rates of stunting - 40 percent in FY23 - persist. Critical constraints, including recurrent fiscal and current account deficits, protectionist trade policies, unproductive agriculture, a difficult business environment, a heavy state presence in the economy, and a financially unsustainable energy sector, have remained largely unaddressed, leading to slow and volatile growth. Amid the COVID-19 pandemic, the catastrophic 2022 floods and macroeconomic volatility, poverty has increased. The estimated lower-middle income poverty rate stood at 42.3 percent (US$3.65/day 2017 PPP) for FY24 with an additional 2.6 million Pakistanis falling below the poverty line from the year before.

Pakistan has made progress towards macroeconomic stabilization. At the beginning of FY24, Pakistan's economy faced a potential economic crisis in the face of political uncertainty, global monetary policy tightening, and fiscal and external imbalances, that led to pressures on domestic prices and foreign reserves. To preserve reserves, measures to manage imports and capital outflows were introduced, which disrupted local supply chains, dampened economic activity and exacerbated inflationary pressures. With the approval of the IMF Stand-By Arrangement in July 2023, exchange rate flexibility was restored, import controls were relaxed, and steps were taken to contain the fiscal deficit. Political uncertainty also diminished with the successful conduct of the general elections. Coupled with favorable weather conditions and easing external conditions, the economy began recovering in FY24. Consequently, growth of real GDP at factor cost rose to 2.5 percent y-o-y in FY24, after contracting by 0.2 percent in FY23.

GDP growth is projected to gradually recover but remain below low. Real GDP growth is estimated to reach 2.6 percent in FY25, supported by robust private consumption and investment, buoyed by lower inflation, high remittance inflows and increased credit to the private sector. While economic activity is expected to strengthen in FY26 (3.2 percent) and FY27 (3.5 percent), growth will likely remain constrained by tight macroeconomic policies focused on rebuilding fiscal and external buffers and mitigating risks to economic imbalances. Combined with slower wage and employment increases, and high population growth at nearly 2 percent, the poverty headcount for FY25 is estimated to remain unchanged at 42.3 percent, close to COVID-19 peak levels, implying an additional 1.8 million poor people. However, the poverty rate is expected to decrease to 40.8 percent by FY27. The current account is expected to record a surplus of 0.1 percent of GDP in FY25, supported by stronger remittances and recent high emigration. Still, it is projected to swing to a deficit as domestic demand recovers and driving imports higher. Due to large interest payments, the fiscal deficit is estimated to remain elevated at 6.7 percent of GDP in FY25, before gradually declining. Inflation is expected to bottom out at 6.0 percent in FY25, driven by base effects and lower commodity prices, before rising in the medium term due to stronger demand and additional tax measures.

The Government continues to face a challenging economic environment while maintaining progress towards macroeconomic stabilization and critical structural reforms. The macroeconomic outlook hinges on continued macroeconomic stabilization and implementation of critical structural reforms under both the IMF-EFF program and the government’s new economic transformation plan - Uraan Pakistan. Projections are predicated on fiscal restraint, prudent macroeconomic management, the realization of expected rollovers and new external financing, and gradual progress with the structural reform agenda. Downside risks remain elevated with elevated debt levels, financial sector risks, and policy and external uncertainties posing significant risks. Continued fiscal consolidation and deep structural reforms, trade liberalization, reducing the state presence in the economy, and addressing business environment constraints are required for a sustained economic recovery over the medium term with higher real incomes, better jobs and lower poverty.

Last Updated: Mar 25, 2025

After decades of volatile low growth and low investment, Pakistan has fallen behind its peers in key metrics of development. It now has an opportunity to durably take another course. The economy is recovering from the recent crisis as the government has launched an ambitious program of fiscal, energy, and business environment reforms that have the potential to sustain a growth acceleration. These reforms can lead to a durable recovery made of stronger investment, productivity, and growth if they are duly implemented and sustained. The Country Partnership Framework (CPF) will run up to 10 years - with a Performance and Learning Review (PLR) in FY30 - and is anchored around six outcomes focused on Pakistan’s most critical development needs. This approach is a shift from the past, as it aims to focus less on short-term adjustment programs and on often small investments in scattered sectors, to more selective, stable, and larger investments in areas critical for sustained development and that require time and persistence for impact. This should also help shield the program from a volatile polity and a track record of frequent changes in priorities and short-lived initiatives while facilitating alignment with other development partners.

The CPF supports six key country outcomes:

• Reduced child stunting through increased access to clean water and sanitation services, basic health and nutrition and family planning services
• Reduced learning poverty through quality foundational education
• Increased resilience to floods and other climate-related disasters and better food and nutrition security in the face of climate impacts on the water-agriculture nexus
• Cleaner and more sustainable energy and better air quality
• Increased fiscal space and better management and more progressive public expenditures for development
• Increased productive and inclusive private investment, particularly to improve external trade balances and higher, more sustainable growth.

A series of policy notes and other analytical work* helped inform the CPF priorities, together with extensive consultations across the country with key stakeholders including the government, private sector, civil society, think tanks, academia, media, and development partners. The CPF has also been informed by the Government’s priorities, both at the Federal and Provincial levels, as well as lessons learned from previous country engagements. It is also well aligned with key objectives of the recently launched National Economic Transformation Plan, Uraan Pakistan, and those of the Prime Minister’s Economic Transformation Agenda and Implementation Plan.

For more information on the CPF country wide consultations, please visit the CPF Consultations Webpage.

* These include the following reports and policy notes:

Reports:

• Pakistan - Performance and Learning Review of the Country Partnership Strategy for FY15-FY20 
• Pakistan Human Capital Review Report - Building Capabilities Through Life
• From Swimming in Sand to High and Sustainable Growth: A Roadmap to Reduce Distortions in the Allocation of Resources and Talent in the Pakistani Economy
• Pakistan Country Climate and Development Report
• 'When Water Becomes a Hazard' - Water Poverty Diagnostic Report
• Female Labor Force Participation in Pakistan: What do we Know?

Policy Notes:

• Improving Learning Outcomes 
• Reducing Child Stunting 
• Rationalizing Government Expenditures 
• Unleashing the Agri-Food Sector 
• Achieving Sustainable Energy 
• Strengthening Instituions for Effective Implementation 
• Transforming Pakistan's Private Sector

Last Updated: Mar 25, 2025

ENHANCING DISASTER RESILIENCE

As one of the countries most vulnerable to climate change, Pakistan is affected by recurring catastrophes, including the unprecedented 2022 floods, which affected an estimated 33 million people, resulting in US$14.9 billion in damages and US$15.2 billion in economic losses. Pakistan’s economy continues to suffer chronic strain from prevailing and likely future threats of hazards. Since the 2005 Pakistan earthquake, which led to nearly 73,000 deaths and caused damages to over 570,000 houses, the Bank has been supporting the Government of Pakistan in shifting to an anticipatory disaster risk management approach. Initially, the Bank provided technical assistance to the government to highlight physical and fiscal risks from hazards, including risk assessments of federal and provincial capitals. In parallel, the Bank also used grant resources to build the capacity of Provincial Disaster Management Authority of Balochistan.

Following the floods of 2014, at the request of Government of Pakistan, the World Bank prepared the US$125 million IDA-funded Disaster and Climate Resilience Improvement Project (DCRIP) to support the restoration of flood protection infrastructure and strengthen government capacity to manage disasters and climate variability in Punjab. The project was successfully concluded in November 2021, achieving its intended development objectives and surpassing the targets for several key results indicators. DCRIP directly benefitted more than 8 million people, half of which are women. The project also repurposed US$7 million to support the Government of Punjab in the pandemic emergency response through procurement of personal protection and healthcare equipment.

In 2016, the Bank also prepared and delivered the US$100 million IDA-funded Sindh Resilience Project (SRP) to mitigate flood and drought risks in selected areas, and strengthen Government of Sindh's capacity to manage natural disasters. About 5.75 million people across the province have benefitted from project interventions till date. The drought mitigation component of the project, comprising construction of small groundwater recharge dams, has already started generating strong development impacts for the target communities. In 2021, the Bank approved an additional financing of US$200 million to scale up the small groundwater recharge dams component and set up an emergency rescue service for Sindh.

The Bank has also prepared and delivered the US$188 million IDA-funded Pakistan Hydromet and Climate Services Project which aims to strengthen Pakistan’s public-sector delivery of reliable and timely hydro-meteorological services and enhance community resilience to shocks. The Contingent Emergency Response Component (CERC) was activated under this project to disburse US$150 million in response to the 2022 floods to provide cash assistance to 1.3 million flood affected families.

Furthermore, as part of comprehensive emergency response and rehabilitation support for 2022 floods, the Bank is implementing two emergency projects for the province of Sindh, which was disproportionately affected by the catastrophe. The US$500 million IDA-funded Sindh Flood Emergency Rehabilitation Project (SFERP) aims to rehabilitate damaged infrastructure and provide short-term livelihood opportunities through cash-for-work in selected areas of Sindh affected by the 2022 floods. The project is also strengthening the capacity of the Government of Sindh to respond to the impacts of climate change and natural hazards through expansion of the Sindh Emergency Rescue Service (Rescue 1122) and enhancing the preparedness of relevant line departments. In just over 2 years of implementation, the Sindh Flood Emergency Rehabilitation Project has made rapid implementation progress which is reflected in the significant results achieved till date. About 3.6 million people have benefited from rehabilitated infrastructure built to resilient standards. Meanwhile approximately 139,000 households have benefited from short term livelihoods support, of which 45 percent are women.

Similarly, the IDA-funded US$500 million Sindh Flood Emergency Housing Reconstruction Project and the First Additional Financing of US$450 million are delivering beneficiary-driven, multi-hazard resilient reconstruction of core housing units damaged or destroyed in the floods of 2022 in selected districts of Sindh for more than 2 million beneficiaries. The Project is supporting the provision of an estimated 770,000 housing subsidy cash grants and strengthening the capacity of the Government of Sindh by providing technical assistance for the overall housing reconstruction program. It will also strengthen efforts at providing and improving safely managed water, sanitation, and hygiene services which play a critical role in preventing water-borne diseases which contribute to the high rates of child stunting in the province. The Project has mobilized parallel financing from the Government of Pakistan, Government of Sindh, IsDB and ADB. The Sindh Flood Emergency Housing Reconstruction Project has also achieved strong implementation progress with more than 1,050,000 beneficiary bank accounts opening, approximately 35% are for women. For majority of the women, this marks the first time they have been able to open their own bank account, promoting financial inclusion and empowerment. As of March 2025, around 213,000 core housing units have been reconstructed to multi-hazard resilient standards.

The Bank has also launched the Country Climate and Development Report (CCDR) for Pakistan. The Pakistan CCDR provides analyses and policy recommendations on harmonizing efforts to achieve further economic growth and lower poverty rates, on the one hand, with the pursuit of a climate-resilient, low-carbon, and equitable development path, on the other. The CCDR strongly emphasizes the need to build long-term resilience while exploring pathways for Pakistan to achieve deep decarbonization by 2050, and eventually reach net-zero emissions by 2070 without undermining its development ambitions.

Most recently, the Bank carried out the Pakistan Crisis Preparedness Gap Analysis (CPGA) in collaboration with the government, development partners, non-governmental organizations, and the private sector. The CPGA assesses and provides recommendations on the preparedness for natural hazards, food insecurity, and health emergencies, across five key components: Legal and Institutional Foundations; Understanding and Monitoring Risks; Financial Preparedness; Primary Response; and Social and Livelihood Support. The analysis, part of the World Bank’s new Crisis Preparedness and Response Toolkit, provides a high-level overview of crisis preparedness gaps in Pakistan and provides a roadmap for future to strengthen the country’s crisis preparedness.

HEALTH

Pakistan has made progress in mainstreaming the Sustainable Development Goals (SDGs) in national policies and strategies. After 2024 general election, Pakistan seems to have a stable political situation. However, due to persistent challenges in implementation of health policies and strategies for last decade, both Federal and Provinces need to reform the health sector in order to accumulate human capital for economic development. A review of the National Health Vision 2016-2025 identified areas for urgent improvement, which will be incorporated into the new National Health & Population Policy. Positive developments include the completion of the Joint External Evaluation for pandemic preparedness and the development of the National Action Plan for Health Security (NAPHS) 2024-2028, with secured financing from the Pandemic Fund [6].

According to the maternal mortality survey in 2019 [1], the country’s maternal mortality ratio was 186 deaths per 100,000 live births down from 276/100,000 live births in 2006-07. Large gaps exist across provinces with Sindh and Balochistan having twice the number of maternal deaths as compared to the national average. The country also has one of the highest infant and under-5 mortalities in the region (62 and 74 deaths per 1,000 live births, respectively). Twenty-two percent of the children born have low birth weight with variations across provinces. The current Universal Health Coverage Monitoring Report 2024 [7] shows half of the country has access to essential health services, but it is far from the 80+ target by 2030. Major challenges remain despite progress from a UHC index of 40 in 2015 to 53.9 in 2023.

The Pakistan’s health financing remains below the regional average, with marginal improvements. As per latest National Health Accounts (2021-22), the total health expenditure was Rs. 1,962 billion PKR, with 46% funded by the public sector, 0.5% by official donor agencies, and 53.5% by the private sector [8]. High Out of Pocket (OOP) payments lead to limited risk-pooling and increased vulnerability for poor households. Development of health financing strategies for Khyber Pakhtunkhwa and Punjab is ongoing, which is crucial for meeting international commitments like the SDGs. Improved financial management is needed to enhance fiscal space in health, especially at the primary healthcare level [6].

On average, access to quality reproductive, maternal, newborn, child, and adolescent health with nutrition services in Pakistan is inadequate, with regional disparities. About 49 percent [2] of pregnant women do not receive the recommended four or more antenatal care (ANC) visits essential for a safe and healthy pregnancy outcome. With 33.8 percent of births outside of health facilities, the risk of maternal and infant mortality and morbidity is high. 42 percent of women of reproductive age in Pakistan have anemia due to poor nutrition. At 3.6 births per woman [3], Pakistan’s fertility rate is still relatively high, and except for Punjab, adolescent fertility has increased, and modern contraceptive prevalence rate (mCPR) has been low in the last decade at 25 percent. High fertility rate and teenage pregnancies contribute to poor maternal and child health outcomes which pose risks of death and illness.  Poor health affects all facets of women’s lives including delayed development milestones, education, learning skills and gainfully participating in the labor force.

Stunting rates for children under age 5 have dropped from 45% to 40.2% from 2013 to 2018 [4]. However, it is still high, and large disparities exist among provinces. This prevalence varies from 36.4% in Punjab to 46.6% in Balochistan. The average annual rate of reduction since the last 2018 National Nutrition Survey has been estimated at only 0.5 percent, which is frighteningly slow to reach the national targets. Although the situation is worse in rural and poor households, more than 20 percent of under-5 children in the wealthiest income quintile are also stunted, meaning poverty is not the only driver of stunting.

Immunization coverage for children aged 12-23 months increased considerably over the past 8-9 years from 54% in 2013 to 77% in 2022. In Punjab 89.5% of children are fully immunized while in Khyber Pakhtunkhwa, Sindh and Balochistan 60.5%, 68%, and 37.9% are respectively fully vaccinated [5].

The World Bank has been supporting the health sector in Pakistan through national and provincial projects. The “National Health Support Program”, approved in Fiscal Year 2023, supports the strengthening of equitable delivery and quality of essential health services at the primary level and the “Sindh Integrated Health and Population Project”, approved in Fiscal Year 2023, supports to improve quality health services in selected areas and restore and rehabilitate healthcare services impacted by floods. The “Punjab Family Planning Program” aims to improve modern contraceptive prevalence rate (mCPR) while simultaneously tackling the knowledge and cultural barriers that hinder access to family planning services in the province. Provincial “Human Capital Investment projects” are being implemented in Balochistan, Punjab and Khyber Pakhtunkhwa with the aim to improve utilization of quality health targeted and social services to the poor and vulnerable population.

The World Bank has also invested in analytical work through “Programmatic Advisory Services and Analytics (PASA)”, aiming to generate evidence for reforms and provide technical support to the federal and provincial governments in implementing Universal Health Coverage in Pakistan. Additionally, the Bank is working with the Government of Pakistan, through analytics to build capacity of the country stakeholders of the human and animal sectors on health emergency preparedness and response from a one-health perspective.  The Bank is also developing thorough and comprehensive analyses on nutrition that will contribute to the development of a nation-wide program to accelerate stunting reduction in under-five children in pursuit of accumulating human capital in Pakistan.

Sources: [1] Pakistan Maternal Mortality Survey 2019; [2] Universal Health Coverage Index 2023; [3] Demographic and Health Survey 2018; [4] National Nutrition Survey 2018; [5] Third-Party Verification Immunization Coverage Survey Round Two 2022; [6] Country Policy and Institutional Assessment (CPIA) 2024 [7] Pakistan UHC Monitoring Report 2024. [8] National Health Accounts 2021-2022

EDUCATION

Actions to Strengthen Performance for Inclusive and Response Education (ASPIRE) is a 5-year US$200 million program that became effective in August 2020. The program is aimed at enhanced targeting of COVID-19 education response, generating improved learning opportunities for out-of-school children (OOSC) and at-risk students, and enabling stronger federal-provincial coordination and management. To date, the Ministry of Federal Education and Professional Training (MoFEPT) and the provincial education departments have achieved 12 Disbursement-Linked Results (DLR): adoption of National School Health and Safety Protocols, approval of National Education Response and Resilience Plan, provision of distance learning kits to 50,000 students across the country, provision of hygiene and cleaning kits to 20,000 public schools nationwide, communication campaigns, teachers training, and multi-modal programs. The ASPIRE program has been successful at leveraging the Inter-Provincial Education Ministerial Conference (IPEMC) and the Technical Steering Committee (TSC) platforms for improved coordination between the Federal and Provincial Education Departments which enhanced coordination in this sector across the country, resulting in achievement of DLRs that include official notifications of provincial foundational learning policies, operationalization of an item bank for national assessment and learning poverty comparisons, standardization of the Annual School Census cycle across provinces and the implementation of National Achievement Test (NAT) 2023. The remaining DLRs on rehabilitation/construction of classrooms and Wash facilities in schools, assessment of the uptake and impact of teacher training programs, operationalization of a national open-source data platform are scheduled for completion in FY25.

Data and Research in Education (DARE) is a US$10 million Bank Executed Trust Fund (BETF) provided by the Foreign, Commonwealth & Development Office alongside the ASPIRE program. The project supports Pakistan education sector’s response and recovery by providing technical assistance to the Federal Government, in order to strengthen the education data infrastructure and coordination mechanisms between the federal and provincial governments, enhance evidence-based decision making and improve targeting of programs to reduce inequality and gender-gap. The main components under DARE include strengthening the provincial-Federal education data management processes, enhancing sector coordination on student learning outcomes and improvement of sector monitoring, evaluation and decision making by supporting policy research and impact evaluations. DARE has played a pivotal role in supporting the Government of Pakistan in the development and implementation of a standardized educational data framework and the design and institutional capacity building to execute the National Achievement Test. The TF has also implemented the World Bank’s Global Education Policy Dashboard across Pakistan and provides long-term support for the establishment of the Pakistan Institute of Education and continued institutional strengthening. Some of the critical reports produced under DARE’s support include the Public Expenditure Review on Education and the District Education Performance Index Report.

Under the 5-year Higher Education Development in Pakistan (HEDP) the World Bank supports research excellence in strategic sectors of the economy, improved teaching and learning and strengthened governance in the higher education sector. The project has been successful in bringing some key reforms in the sector, including: introduction of an Undergraduate Education Policy which established the criteria for Associate Degree and transition of all Bachelor’s Degree programs from two-years to four-years; research capacity development by providing competitive research, innovation, and commercialization grants, such as the Rapid Research Grants, for research on critical COVID-19 related topics and Innovative Seed Fund to support startups and entrepreneurs; expansion of digital connectivity and remote learning systems to ensure continuity of education during COVID-19 and capacity building trainings of faculty, especially females under the newly established National Academy for Higher Education.

Punjab

The Bank supports interventions in the education sector in Punjab through the Human Capital Investment project (US$200 million, with US$30 million supporting strengthening and scale-up of early childhood education in 11 districts in South Punjab). The project supports the development of a 2-year early childhood education (ECE) curriculum and strengthening of ECE services in Punjab. Currently a minimum of 11,000 ECE classrooms meet new quality standards, which include the presence of a trained teacher and caregiver as well as a teaching and learning kit with instructional material and reading corners. In addition, content for teaching and learning materials is being updated to ensure alignment with evolving curricula and standards.  The project is also supporting rehabilitation of around 450 flood-affected schools in South Punjab.  This project was extended for one year and closes in June 2026. 

Sindh

The 5 year Sindh Early Learning Enhancement through Classroom Transformation (SELECT) project of $155 million – financed in part by grants from the Global Partnership for Education ($55 million) – supports the Sindh Education Sector Plan & Roadmap (SESPR) 2019–2024 and targets 12 of 29 districts in Sindh with the lowest performance on education outcomes. SELECT focuses on foundational literacy and teaching quality through teacher training and coaching, classroom observations, learning materials, and an early grade reading assessment; school construction to improve access to elementary schools and enhance school learning environments (including in flood-affected schools); school dropout prevention (especially for girls) through a student attendance monitoring and redressal system; and improved school and district-level governance. The project is due to close in April 2026.

Balochistan

The Balochistan Human Capital Investment Project (BHCIP), which became effective in 2021, is implemented together with the health sector. The education component (US$17.75 million) focuses on the improved utilization of quality education services in selected refugee hosting districts. BHCIP funds the rehabilitation of schools and upgrading of primary schools to middle and high schools, improvement of student assessment and teacher training across the province by supporting the Balochistan Assessment and Examination Commission, revamping of continuous professional development of teachers through the Provincial Institute of Teacher Education, and strengthening of the education sector stewardship.

Khyber Pakhtunkhwa

In March 2021, the Government of Pakistan approved the US$200 million Khyber Pakhtunkhwa Human Capital Investment Project (KPHCIP) – a five-year project that aims to improve the availability, utilization, and quality of primary healthcare services and elementary education services in 4 districts of Khyber Pakhtunkhwa. The districts were selected because they have some of the highest refugee populations in the province. This financing includes a grant of USD $62.5 million from the IDA18 regional sub-window for refugees and host communities (IDA-18 RSW). The education component (US$115 million) of the project focuses on improving the availability, utilization, and quality of education services in selected districts for all children, especially out-of-school children, refugees, and girls.  The project was restructured in 2023-24 to support rehabilitation and reconstruction of flood-affected schools in the original districts as well as 9 additional flood-affected refugee-hosting districts. The project is currently supporting the equipping of ECE classrooms, establishment of Accelerated Learning Pathways centers and girls’ community schools, and training of teachers and school leaders.  The project also supports implementation of student learning assessments in grades 2, 5 and 8, as well as interventions to expand access through construction of additional classrooms and upgrading school facilities.  This project is expected to be extended by 18 months with a new closing date of December 2026.

Last Updated: Mar 25, 2025