IFC eyes $2b annual investment for a decade in Pakistan

International Finance Corporation chief Makhtar Diop’s maiden visit to Pakistan follows the World Bank’s plans to allocate up to $20 billion for Pakistan under a Country Partnership Framework announced in January, with the IFC also slotted to invest the same amount.

“Between now and maybe October we will be able to progress enough on a couple of transactions that will signal that this is a country ready to receive large-scale financing for critical and important infrastructure,” said Makhtar Diop, the corporation’s managing director.

Diop said a $2 billion annual investment “is not a large number” for Pakistan, which needs infrastructure development in international airports, energy, water and ports.

Cash-strapped Pakistan is currently under a $7 billion International Monetary Fund bailout program and navigating a tricky path to recovery.

The South Asian nation narrowly averted a sovereign debt default, with reserves not sufficient enough to meet a month’s worth of controlled imports.

The IFC had an exposure of $2.1 billion in Pakistan during the fiscal year 2024, ending in June, marking its record investment in the South Asian country’s $350 billion economy.

Pakistan’s economy grew by a meagre 0.92% in the first quarter of the fiscal year.

Diop said the IFC is looking into agriculture, infrastructure, the “very important” financial sector, and the digital sector.

Pakistan is looking to generate revenue by speeding up a privatisation push, but efforts to privatise the national flag carrier, Pakistan International Airlines, and outsource the capital’s airport have fallen flat.

In line with the IFC’s global push, Diop said equity-based transactions were to be expected in Pakistan too.

“Debt will still be a very important part in our business, but our equity will increase in the world, but also in Pakistan. It means we are believing really in Pakistan because we can take equity for a long, long time,” he said.

Last week, Prime Minister of Pakistan Shahbaz Sharif said that the country’s economy was set to take off following a year of dedicated efforts by the government’s economic team to restore stability.

He highlighted that the financial sector had overcome significant challenges and was now on a path to sustained recovery and progress.

“Pakistan’s journey from darkness to light in a year is the result of a collective effort,” the prime minister said while addressing an event held here to celebrate Youm-e-Tameer-o-Taraqqi.

He noted that the government successfully engaged with the International Monetary Fund (IMF) to secure a $7 billion, three-year programme in September last year, which prevented the country from defaulting.

Although the nation faced challenges due to the IMF’s tough conditions, he emphasized that the economy had now stabilized and was ready to move toward sustained progress and development. He said the salaried class had to suffer the most due to the IMF programme as it was now collectively paying Rs 300 billion taxes. He also paid special tribute to the salaried class for contributing such high taxes.

 The prime minister stated that the inflation rate had been reduced from 40 per cent to as low as 2.4 per cent in January 2025, leading to a decline in the policy rate.

 He urged the business community to support the government’s efforts to stabilize the economy, emphasizing that their involvement was crucial.

 He assured that the government would fully engage the business community in the policymaking process, as economic growth could not be achieved without consulting the private sector.

 He emphasized that the government was actively working to curb smuggling across the borders. “By legally exporting sugar to Afghanistan, the government secured $211 million in foreign exchange,” the prime minister said, adding that this valuable revenue would have otherwise ended up in the hands of smugglers.

 He acknowledged the dedicated and sincere efforts of the Pakistan Army and law enforcement agencies in helping to curb smuggling activities across the country.

 Regarding the government’s privatization policy, the prime minister stated, “We are now moving towards a massive privatization process, as the government has no role in business activities.”  The prime minister said terrorism had almost been eliminated from the country in 2018, however, due to bad policies of the subsequent government, the menace had resurfaced in the country.

Agencies