It is recently reported that the World Bank has granted a $450 million loan for Pakistan in a bid to support the government’s efforts to help the unprivileged and vulnerable population of the country.
The primary objective of the World Bank behind approving the loan is to support the financial inclusion strategy of the country. The strategy aims to build a dynamic and inclusive financial sector to support the growth objectives of Pakistan, while making formal financial services accessible to the masses.
Financial inclusion means that businesses and individuals have access to useful financial products that satisfies their needs, such as savings, payments, credit, insurance etc., delivered in a responsible and sustainable way.
Out of the $450 million loan, the World Bank plans to release approximately $300 million as a policy credit to help keep the official foreign currency reserves above the $17 billion threshold. It is important to note that Pakistan’s external financing requirements have increased significantly in the past few years mainly because of trade deficit and drop in remittances.
Interestingly enough, it is reported that the World Bank also plans to support the policies of the government on enhancing financial inclusion by launching a national digital transaction accounts scheme and improving the Central Directorate of National Savings (CDNS).
“Pakistan has made significant progress in the implementation of economic reforms”, said Illango Patchamuthu, World Bank Country Director for Pakistan.
As per the World Bank’s data, around 100 million people in Pakistan have no access to formal financial services. The figure represents approximately 5% of the unbanked population of the world.
Patchamuthu added “this needs to change for Pakistani women and men to realise their aspirations.”
In any case, we are hopeful that this loan will help the country in achieving the objectives of its financial inclusion strategy.