The World Bank has approved $800 million worth of loans for two programmes in Pakistan, the Program for Affordable and Clean Energy (PACE) and the Securing Human Investments to Foster Transformation (SHIFT II).
On Tuesday, the World Bank approved $800 million loan for Pakistan’s power sector reforms, human capital development. It prioritizes actions needed to initiate critical power sector reforms focused on: reducing power generation costs, better targeting of subsidies and tariffs for consumers, and improving efficiencies in electricity distribution with the participation of the private sector.
Additional medium-term reforms are under development, focusing on subsidies, competitiveness, and power sector sustainability. The goal is to reduce circular debt over the long-term.
According to Rikard Liden, World Bank task team leader for the Program for Affordable and Clean Energy, “Power sector reforms are critical to resolving Pakistan’s fiscal challenges,” said
He added that decarbonizing the energy mix will reduce the dependence on fossil fuel imports and vulnerability to price fluctuations because of movement in exchange rates. “PACE prioritizes action on such reforms, which must be sustained to address circular debt and set the power sector on a sustainable path.”
Moreover, the $400 million SHIFT II programme supports a federal structure to strengthen basic service delivery for human capital accumulation.
The programme will be helpful to improve health and education services, increase income-generation opportunities for the poor, and promote comprehensive economic growth.
Tazeen Fasih, World Bank task team leader for the SHIFT II programme, said that “Strengthening services that build human capital in a coordinated manner between provincial and federal authorities, along with improved targeting of social safety nets, will better support families to recover from the COVID-19 crisis, and pave the way for more robust crisis preparedness in the future.”
“The reforms underpinning PACE and SHIFT can contribute to facilitating sustainable investments and generate welfare gains for those most in need,” said Najy Benhassine, World Bank Country Director for Pakistan.