World Bank urges Pakistan to turn stability into sustained growth

ISLAMABAD: The World Bank has urged Pakistan to build on its recent macroeconomic stabilisation by accelerating reforms that can produce sustained growth, greater private investment and more employment. The recommendation emerged during a meeting in Islamabad between Finance Minister Muhammad Aurangzeb and a delegation led by Sandeep Mahajan, the institution’s regional practice director for prosperity.

The discussions focused on moving beyond short-term economic stabilisation towards an investment-led and export-oriented growth model. Both sides reviewed Pakistan’s reform agenda, the conditions required to attract private capital and the importance of mobilising financing for infrastructure and other productive sectors.

The visiting delegation acknowledged Pakistan’s progress in restoring economic stability and managing external pressures arising from the regional conflict. It noted that financial buffers and timely policy measures had helped the country absorb recent shocks, while warning that these gains would need consistent reform implementation to become durable.

Aurangzeb said the government wanted to convert improved macroeconomic indicators into economic activity that creates jobs and raises productivity. He highlighted Pakistan’s return to international capital markets through a recent $3 billion Eurobond issuance carrying five-year and 10-year maturities, presenting it as evidence of renewed market access.

The finance minister also identified additional sovereign credit-rating upgrades and stronger investor confidence as key policy objectives. He emphasised that Pakistan would require a credible medium-term transition plan capable of maintaining fiscal discipline, reducing external-sector risks and providing a predictable environment for businesses and investors.

The meeting followed the release of the October 2026 Pakistan Development Update, which estimated that real gross domestic product expanded by 3.7% in the 2025-26 fiscal year, compared with 3.2% a year earlier. The assessment nevertheless placed real per-capita growth at approximately 1.6%, indicating that headline economic expansion has not yet translated into rapid improvements in average living standards.

The development institution has estimated that deeper structural reforms could support annual growth of roughly 6.2% to 6.9% and potentially triple Pakistan’s income levels by 2050. Achieving that trajectory would require improvements in the tax system, business environment, trade regime, energy sector, access to finance and the role of the state in commercial activity.

Privatisation and infrastructure financing were also discussed during the Islamabad meeting. Participants stressed the need for transparent regulatory arrangements, credible post-privatisation oversight and financing structures that allow development partners and private investors to support commercially viable projects without weakening fiscal sustainability.

For Pakistan, the central test will be whether policy stability can survive political and external pressures long enough to unlock productive investment. The government and its development partners are expected to continue working on structural reforms, regulatory improvements and private-sector financing, but their economic impact will depend on execution, continuity and measurable gains in employment and household incomes.