ISLAMABAD: Pakistan is set to secure another $600 million loan from the World Bank under a new reform programme aimed at boosting private investment, improving the business environment and creating employment opportunities.
The proposed financing, titled the Bold Reforms for Investment-Driven Growth and Employment (BRIDGE) Programme, comes despite billions of dollars in foreign loans secured by successive governments for similar reform initiatives.
According to documents released by the Washington-based lender, the loan is expected to be approved on January 29, 2027, with the Ministry of Finance responsible for securing the financing.
The programme has an estimated cost of $1.2 billion. The World Bank will provide $600 million, while the federal government is expected to contribute the remaining $593 million.
In exchange for the financing, the government has committed to introducing several legislative and regulatory changes. These include enacting a new Investment Act and Factoring Law, establishing a database of overseas-bound Pakistanis, allowing unrestricted international trade in wheat and sugar, and increasing private-sector participation in urea imports.
The latest financing comes as questions persist over the effectiveness of previous foreign-funded reform programmes. Despite substantial borrowing, Pakistan continues to struggle with weak private investment and limited foreign direct investment (FDI).
The World Bank’s latest assessment puts private investment at around 10% of Pakistan’s gross domestic product (GDP), less than half the level recorded by regional economies. FDI stands at approximately 0.6% of GDP, reflecting persistent weaknesses in the business environment.
Successive governments have also borrowed from international lenders to introduce reforms that critics argue could be implemented through domestic policy decisions and political commitment. Separately, Pakistan plans to secure another $750 million from the Asian Development Bank for pension and private-sector reforms, with the financing also intended to support the budget.
The government previously established the Special Investment Facilitation Council (SIFC) to attract foreign investors and address obstacles to investment.
The World Bank said Pakistan had largely achieved economic stabilisation under its ongoing International Monetary Fund (IMF) programme and was now shifting towards a growth-oriented reform strategy. The proposed initiative aims to make private investment and exports the main drivers of economic expansion and employment.
Under the programme, Pakistan plans to increase private investment from its current level of around 10% to 15% of GDP by 2035.
A key component of the programme involves fully operationalising the Pakistan Business Portal as a central digital platform for business registrations, licences and other official approvals.
The proposed Investment Act will strengthen investor protections, clarify business rights and obligations, and establish clearer rules on restricted sectors through an updated negative list.
The government will also introduce a Factoring Law to improve access to financing for businesses by allowing them to raise funds against unpaid invoices and other receivables.
Other commitments include passing a unified Insolvency Law, establishing a dedicated regulatory authority and making the EXIM Bank fully operational with a banking licence and internationally recognised export financing and guarantee products.
The programme also aims to reduce the time required to clear imports and exports. The government has already introduced a Customs Faceless System to streamline clearance procedures.
In the agriculture sector, the government will establish a unified national system for approving seed varieties to speed up registration and improve access to high-yielding and climate-resilient seeds.
It will also increase private-sector participation in the urea fertiliser market and remove wheat and sugar from the Import and Export Order 2022, allowing freer international trade in both commodities. The proposed changes to wheat and sugar trade would require government approval rather than substantial foreign financing.
The World Bank financing will also support reforms in overseas employment, vocational training and the pharmaceutical industry.
