Will $70 Million Loan Save Its Collapsing Economy?

Pakistan Credit: Islamabad is turning to another lifeline as its economy struggles to stay afloat. The World Bank approved a loan of $70 million (approximately Rs 6,270 billion) to Pakistan. It aims to stabilize public services and support economic reforms.

The loan will be distributed under a larger program, Public Resources for Inclusive Development – ​​Multi-Step Program Approach (PRID-MPA), which could provide financing of up to $1.35 billion, according to Reuters. The country is expected to receive this amount in multiple phases.

Where Will the Funds Go?

Of the total loan, $60 million was allocated to the federal program and $10 million to the provincial initiative in Sindh.

The approval follows the World Bank’s $47.9 million grant in August for primary education reforms in Punjab, the country’s most populous province.

Possible Objections from India

A report commissioned by Pakistan’s Ministry of Finance in November and prepared with contributions from the International Monetary Fund (IMF) and the World Bank highlighted that fragmented regulations, opaque budgets and political interventions were undermining investment and weakening revenue collection.

Reuters reported that this international financing could trigger regional tensions, as India is likely to oppose World Bank loans to Pakistan.

Pakistan’s Dependence on Borrowing

Pakistan’s economy operates predominantly on borrowed funds and frequently seeks loans from the IMF and the World Bank to keep its finances afloat. Additionally, Islamabad’s loans from China and Saudi Arabia have contributed to its growing debt burden.

Earlier in August, Pakistan received a $47.9 million grant from the World Bank to improve primary education in Punjab. These developments clearly demonstrate that the country’s financial stability largely depends on external financing.