Washington: The World Bank has approved a $350 million credit to Pakistan to support its medium-term reform program aimed at promoting sustained, rapid economic growth as its main vehicle for poverty reduction.
The Second Poverty Reduction Support Credit (PRSC II), which supports the government's Poverty Reduction Strategy Paper, will finance reforms designed to maintain macroeconomic stability, improve management and effectiveness of public expenditures, and assist power sector reforms.
It will also support the privatisation program, improve the regulatory framework for competition, and enhance female labour force participation and labour market flexibility, the Bank has said in a statement.
"Over the last six years, Pakistan has emerged as one of the fastest growing economies in Asia, with rising per capita income, and improving social indicators. Growth has averaged 7 percent between 2003/04-2005/06, and the poverty head count ratio has fallen significantly in recent years.
The country has also made impressive strides in deregulating its economy to increase competition and reduce cost of doing business, and implementing structural reforms, particularly in the power sector, the Bank said.
"Economic reforms are now contributing to increased investor interest from Pakistanis and foreign investors alike," said Yusupha Crookes, World Bank Country Director for Pakistan.
"The ongoing reform program supported by this project will contribute to sustaining rapid growth. We hope this, along with policy reforms and public investments to increase poor people's participation in the economy, will accelerate the country's progress towards reaching the Millennium Development Goals."
The PRSC II will also support improved governance through reforms in financial management, procurement, and the statistical system.
It will help accelerate progress in human development by creating additional public resources for education and health, and strengthening the health and education national sector policies.
"The PRSC supports the poorest and most vulnerable segments of the population through targeted programs aimed at addressing poverty and vulnerability directly," said Zahid Hasnain, World Bank Senior Economist and project co-task team leader.
"It will also support efforts of provincial governments in improving the quality and access of underserved populations to health and education services," he added.
This credit, from the International Development Association (IDA), the World Bank's concessionary lending arm, carries a 0.75 per cent annual service fee, while a portion this credit (less than half) also carries an interest charge of 4 per cent per annum. The entire credit has a 10-year grace period, and a maturity of 35 years.