In a significant move, the World Bank’s board of executive directors has given the green light to $350 million in funding for the Second Resilient Institutions for Sustainable Economy (RISE-II) operation in Pakistan. Najy Benhassine, the World Bank’s country director for Pakistan, emphasized that this project signifies a crucial step in the ongoing efforts for “tax, energy, and business climate reforms.”
The RISE-II initiative is designed to fortify fiscal management and enhance competitiveness, aiming for sustained and inclusive economic growth in Pakistan, which grapples with stagnant economic conditions, persistent inflation, and dwindling foreign reserves. Derek H. C. Chen, the task team leader of the operation, stated, “Based on the foundations laid through RISE-II and parallel support by other IFIs, Pakistan has the opportunity to tackle long-standing structural distortions in its economy after the upcoming general elections.”
Chen cautioned that failing to seize this opportunity could lead the country into “stop-and-go economic cycles,” emphasizing the critical role of these reforms. The operation’s objectives extend to reducing the cost of tax compliance, improving financial sector transparency, promoting digital payments, and boosting exports through lower import tariffs, as outlined by the World Bank.
Addressing concerns raised in a recent conference, Martin Raiser, World Bank Regional Vice President for South Asia, warned against short-term measures such as domestic debt restructuring and one-time investments without comprehensive reforms addressing Pakistan’s broader economic challenges. He stressed that the “creation of a new institution is no quick fix” and urged a focus on improving the taxation system, competitive market conditions, and state-owned entities.
This development follows a previous report by the World Bank emphasizing the critical need for fiscal reforms and sustainable growth in Pakistan. The global lender underscored the importance of careful economic management and deep structural reforms to ensure macroeconomic stability and growth. As the RISE-II project unfolds, all eyes are on Pakistan’s commitment to implementing these reforms for a resilient and sustainable economic future.
