IFC to boost investment in Pakistan, unlocking $2b annually for infrastructure
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The International Finance Corporation (IFC), the private investment arm of the World Bank, is increasing equity investments and focusing on large-scale infrastructure financing in Pakistan.
According to IFC Chief Makhtar Diop, the investment plan could unlock up to $2 billion annually over the next decade. Diop's visit to Pakistan follows the World Bank's announcement of a $20 billion Country Partnership Framework for the country, with the IFC matching this allocation.
Diop emphasized that the $2 billion annual investment is not significant for Pakistan, which needs extensive infrastructure development in sectors like energy, water, ports, and international airports.
He expressed confidence that within a few months, progress on key projects will signal Pakistan's readiness to receive large-scale financing for critical infrastructure.
Pakistan, currently under a $7 billion bailout program from the International Monetary Fund (IMF), is navigating a challenging economic recovery. The country narrowly avoided a sovereign debt default, with its reserves insufficient to cover even a month's worth of imports.
The IFC's exposure in Pakistan reached a record $2.1 billion for the fiscal year 2024. Diop highlighted the IFC's interest in sectors like agriculture, infrastructure, finance, and digital industries in Pakistan.
Additionally, Diop noted that equity-based transactions will play a larger role in the country's development, as the IFC increases its equity investments globally, including in Pakistan.
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Express Tribune
10 hours ago
- Express Tribune
WB readjusts poverty line in Pakistan at 44.7%
Listen to article The World Bank has adjusted upward the income levels in an effort to measure global poverty, which has also pushed the percentage of Pakistanis living in poverty by to 44.7% — an outcome that may not still be fully reflecting the harsh ground realities due to the use of seven years old survey data. The Washington-based lender on Thursday released its new international poverty line to reflect changes in the prices of goods and services and their implications on the global population. The new poverty line for Pakistan, which is a lower middle-income country, is set at $4.20 per person per day, up from $3.65, said Christina Wieser, the senior poverty economist of the World Bank while briefing the media persons here. She said that due to the upward revision, for the lower middle income level, the poverty ratio has jumped from 39.8% of the old level to 44.7% on the threshold of $4.20 per day income. The World Bank has also updated the extreme poverty line from $2.15 to $3 per person per day. Because of the revision in the threshold, 16.5% of the Pakistani population lives in extreme poverty, up from 4.9% under the previous $2.15 threshold, said Christina. She said that one of the reasons for such a high jump was that the majority of the people were clustered around $2.15 to $3 per day income level, which resulted into a significant surge. About 82% of this increase in extreme poverty is due to the higher value of the new international poverty line reflecting increases in the national poverty lines of comparator countries, with the rest explained by price increases in Pakistan between 2017 and 2021, according to the World Bank. The World Bank has not used the latest population census data and instead relied on the United Nations population dataset. Christina also added that the underlying Household Income and Expenditure Survey (HIES) 2018/19 data has been used for both national and international estimates. While international poverty lines are essential for tracking global progress and comparisons, national lines remain more appropriate for informing country-specific policy decisions, said the senior economist. Anything that has affected since 2019 is not included in either Covid-19 or 2022 floods, as the baseline remains the same, said Christina while responding to a question. We are desperately looking forward to the new household integrated economic survey to update our baseline, she added. The local economists had estimated a sharp rise in poverty after the 2022 floods, which inundated one-fourth of the country and adversely impacted populations in three provinces. These updates to the international poverty lines ensure that poverty estimates remain accurate and comparable across countries. The methodology remains consistent with past updates, continuing a practice that began with the introduction of the dollar-a-day line in 1990, according to the World Bank economist. "The revisions help position Pakistan's poverty levels in a global context and underscore the importance of continued efforts to reduce vulnerability and improve resilience," said Najy Benhassine, the outgoing World Bank Country Director for Pakistan. For domestic policy and programme targeting, the national poverty line remains unchanged and continues to serve as the primary benchmark for assessing poverty within Pakistan, Christina said. The forthcoming World Bank Poverty, Equity, and Resilience Assessment for Pakistan will provide critical context for interpreting these updated poverty estimates, she added. The report would offer a detailed update on poverty, inequality, and non-monetary outcomes, will investigate key drivers of poverty, and outline a forward-looking agenda to enhance prosperity and resilience for all Pakistanis. According to the government's last official available numbers, which are based on the 2018-19 survey, 21.9% of the population was living below the national poverty line. However, because national poverty lines differ widely, the resulting poverty rates are not comparable internationally. The need for new international poverty lines arises from the evolving price levels and cost of basic needs across the world and within income groups, according to Christina Wieser. To maintain accurate global comparisons, the World Bank periodically updates these poverty lines. International poverty estimates are based on the headcount of people with consumption below the international poverty line, defined in purchasing power parities (PPPs). Pakistan is among the countries experiencing the largest changes in poverty when transitioning to the 2021 PPPs based on the Low-Income International Poverty Line, according to the World Bank. The World Bank said that the international poverty line should be used only for cross-country comparison and analysis; for evaluating poverty in a particular country (Pakistan), the national poverty line remains the appropriate standard. The revisions help position Pakistan's poverty levels in a global context and underscore the importance of continued efforts to reduce vulnerability and improve resilience, The new figures reflect updated international thresholds and improved data from other countries, not deterioration in living standards, according to Christina.
Business Recorder
13 hours ago
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Pakistan's threshold: World Bank fixes new poverty lines at $4.20/person/ day
ISLAMABAD: The new poverty lines for Pakistan — a lower middle-income country, set at $4.20/person/day up from $3.65/person/day, affecting 44.7 percent of the population rose from 39.8 percent, says the World Bank in its updated international poverty lines by increasing the threshold. The extreme poverty line is now $3/person/day, impacting 16.5 per cent of the population, up from 4.9 per cent under the previous $2.15 threshold. The upper-middle-income poverty line is $8.30/person/day, covering 88.4per cent of the population. Adjusting for purchasing power parities (PPPs) and inflation, the real value of the international poverty lines increases by 28per cent, 5per cent and 11per cent for the lower income countries (LIC), lower-middle-income countries (LMIC) and upper-middle-income countries (UMIC) thresholds, respectively. Pakistan's poverty rate to stand at 42.4%: World Bank The updates to the international poverty lines (IPL) are based on 2021 PPP data from the International Comparison Program (ICP) and ensure that poverty estimates remain accurate and comparable across countries. Christina Wieser, senior economist, Poverty and Equity Global Practice, World Bank, along with Tobias Haque, lead country economist for World Bank Pakistan, while briefing media said that thebank is updating its global poverty lines to reflect changes in the cost of living and consumption habits of people around the world, based on newly available data. As price levels and the cost of basic needs across the world and within income groups evolve, global poverty lines are periodically updated to allow for global comparisons, Wieser added. The new poverty lines are $3 per person per day for LIC, $4.20 for LMIC, and $8.30 for UMIC. These lines are based on 2021 purchasing power parity rates, as well as updated national poverty lines. For Pakistan, 16.5 per cent of the population lived below the $3 international poverty rate in 2018-19 (latest available survey year); and 44.7 per cent below the more relevant lower-middle-income line of $4.20. The revision does not suggest that poverty in Pakistan has worsened as living standards of the population have not changed to what was previously reported. The change in international poverty rates merely reflects a higher threshold for being 'non-poor,' based on improved consumption measurement across low-income countries; changes to LMIC and UMIC lines, where data is of relatively high quality, may reflect an increase in the value of poverty lines as countries become richer. IPL should be used only for cross-country comparison and analysis; for evaluating poverty in a particular country (Pakistan), the national poverty line remains the appropriate standard. The new IPL only affects the level of poverty, trends in poverty remain unchanged. Pakistan is among the countries experiencing the largest changes in poverty when transitioning to the 2021 PPPs based on the Low-Income International Poverty Line. This significant shift in poverty rates under the LIC line, compared to the LMIC and Upper-Middle-Income Country (UMIC) lines, is due to a concentration of households with welfare levels between $PPP2.15 and $PPP3, which is near the International Poverty Line. The need for new international poverty lines arises from the evolving price levels and cost of basic needs across the world and within income groups. To maintain accurate global comparisons, the World Bank periodically updates these poverty lines. International poverty estimates are based on the headcount of people with consumption below the international poverty line, defined in PPPs. Christina Wieser said the update of poverty estimates from 2017 PPP to 2021 PPP, and the new lines, preserves the trends observed in Pakistan, but with higher levels, including in World Bank projected estimates from 2019-2025. The new lines reflect 3 key updates at the global level including New and improved Purchasing Power Parity (PPP) factors, Improved data quality and greater accuracy in welfare measures and Updated values of national poverty lines reflecting current definitions. Copyright Business Recorder, 2025
Express Tribune
13 hours ago
- Express Tribune
GDP growth forecasted at mere 2.44%
Listen to article Pakistan's economy continues to face challenges in achieving meaningful growth, with projections for the fiscal year 2024-25 indicating a slow recovery. According to estimates from the Lahore School of Economics Modelling Lab, GDP growth is expected to reach only 2.44%, reflecting a slight improvement from the 1.7% growth recorded in the previous fiscal year but still remaining below par. These projections broadly align with official figures, including a recent revision by the Pakistan Bureau of Statistics, which lowered its Q3 GDP growth estimate from 2.7% to 2.4%. While international institutions such as the World Bank, International Monetary Fund (IMF), and Asian Development Bank (ADB) have provided slightly higher projections ranging from 2.5% to 2.7%, the overall picture still reflects a sluggish economic recovery. One of the main reasons for the weak growth outlook is the poor performance in key productive sectors, particularly manufacturing and agriculture. Large-Scale Manufacturing (LSM), which should ideally be a driving force for GDP growth, has contracted by 1.9% during the current fiscal year. This continues a trend of stagnation and decline observed over the past two years. In the absence of manufacturing growth, the economy has had to rely heavily on agriculture. However, the agricultural sector has also underperformed, growing at just 0.56%only a quarter of its historical trend rate. The disappointing agricultural growth is largely due to a significant contraction in the production of major crops. Wheat production has dropped by 9%, from 32 million tonnes to 29 million tonnes, while maize has declined by 15%, from 10 million tonnes to 8 million tonnes. Sugarcane production fell by 4%, and rice saw a marginal decrease of 1.4%. Cotton suffered the sharpest fall, contracting by 31%, with output reducing from 10 million to 7 million bales. Analysts argue that this sharp decline cannot be blamed on weather patterns, which have remained consistent. Instead, they attribute the drop to government policy changesmost notably, the removal of long-standing support prices for key crops, a decision that has likely discouraged production. Furthermore, the Pakistan Bureau of Statistics (PBS) measures these crop contractions only in terms of volume, not monetary value. This may result in an underestimation of the actual impact on GDP. For instance, the price of wheat has declined by about Rs1,000 per 40 kg compared to the previous season, reducing the overall value of wheat production by nearly 25%. This translates to significant income losses for farmers and suggests that the real contraction in the agricultural sector could be even worse than officially reported. On the inflation front, the situation has improved compared to previous years, but it still remains a concern. Inflation for FY202425 is projected at 8.37% by the Lahore School's model, higher than the government's upper-end estimate of 7.5% and significantly above the IMF's estimate of 5.1%. The major driver of high inflation in recent years has been the depreciation of the exchange rate, which has now somewhat stabilised due to more effective monetary policies and intervention by the State Bank of Pakistan (SBP). However, energy prices remain a key contributor to inflation. It is estimated that they add around 4% to the inflation rate, primarily due to increased government taxes rather than higher supplier costs. There has been a trade-off between taming inflation and stimulating growth. The current low inflation has come at the cost of stifling agriculture, the only productive sector showing some promise in the absence of manufacturing growth. Experts warn that while bringing inflation down is important, it should not come at the cost of agricultural output, especially when manufacturing is already in decline. Another structural challenge remains the current account deficit, which has long constrained Pakistan's GDP growth. Historical data show that whenever GDP growth exceeds 5%, the current account deficit tends to widen sharply due to increased imports, which are highly sensitive to economic growth. While remittances provide temporary relief, they are not a sustainable solution. With global trade becoming more volatile due to tariff wars and changing regulations, the potential for export-led growth appears to be diminishing. One proposed solution is to focus on investment-led growth by liberalising the import of investment goods. This would allow domestic industries to upgrade their capabilities and drive growth, provided that non-essential consumption imports are controlled to maintain current account balance. Overall, the outlook for Pakistan's economy remains cautious. While inflation is being brought under control, the country has yet to find a solid path to sustainable and inclusive growth. Both manufacturing and agriculture need policy support, and investment strategies must be realigned to address structural weaknesses in the economy, the LSE Modelling Lab added.
