The World Bank has cautioned Pakistan over slow progress in attracting private investment, noting that current levels fall significantly short of targets outlined under the Country Partnership Framework (CPF) for 2026–2035. The institution suggested a results-based strategy backed by clear policy milestones, measurable indicators, and tailored technical support to speed up execution and unlock investment flows.

Finance Minister Muhammad Aurangzeb met World Bank Country Director Bolormaa Amgaabazar and their respective teams on Thursday to review ongoing collaboration and discuss priority areas under the CPF. The Country Partnership Framework identifies higher productive investment as pivotal to lifting Pakistan’s investment-to-GDP ratio over the coming decade.

The document highlights longstanding structural weaknesses—such as heavy state intervention, widespread subsidies, distortionary taxes, trade barriers, and state-owned enterprise dominance—as major constraints on productivity, investment, and export performance. Due to these bottlenecks, private investment remains around 10% of GDP, well below the 20–25% levels in India and Bangladesh. Export performance has also eroded, slipping from 16% of GDP in the 1990s to about 10% today.

To address these challenges, the World Bank Group seeks to support a shift toward a more open and export-oriented growth model. Pakistan’s export sectors are estimated to have an additional $60 billion annual potential, contingent on improvements in the business climate and policy environment.

The World Bank team briefed the Finance Minister on fiscal reforms, revenue measures, macroeconomic stabilization efforts, and ongoing policy engagements. Both sides recognized progress made toward restoring macroeconomic stability through prudent monetary and fiscal policies, and stressed the need to convert this stability into higher investment, sustained growth, and job creation.

Discussions centered on designing a structured investment framework aligned with CPF objectives, covering reforms in the business environment, state-owned enterprises, trade facilitation, capital market development, and export competitiveness. Minister Aurangzeb reaffirmed the government’s commitment to tariff rationalization, stronger SOE governance, regulatory modernization, and enhanced transparency.

He also emphasized deeper capital markets, expanded access to long-term financing, and improved institutional coordination to enable private sector–led growth. Boosting employment and skills development was identified as an essential growth driver. The Minister highlighted the importance of market-aligned vocational training, stronger public–private engagement, and skills matching with domestic and overseas labor demand—particularly in IT, healthcare, hospitality, and construction.

The World Bank outlined its work on labor mobility, skills matching, and digital employment platforms to support workforce productivity and overseas job placements. Discussions also covered priority sectors such as digital services exports, agriculture and agribusiness, minerals and mining, healthcare, and selective manufacturing as potential focus areas for future Bank-supported programs. Both parties agreed that targeted sectoral reforms paired with institutional improvements could yield strong employment and export gains.

Additionally, the Bank briefed the Finance Minister on the potential use of policy-based guarantees to support liability management, refinancing of high-cost debt, and innovative financing mechanisms, subject to policy milestones. Climate finance, regulatory simplification, and federal–provincial coordination were also discussed within the wider reform and development financing agenda.

The meeting concluded with an agreement to continue technical-level discussions to refine priorities, streamline proposed interventions, and advance preparation of upcoming World Bank-supported programs under Pakistan’s reform agenda and the CPF framework.