Pakistan: Second Resilient Institutions for Sustainable Economy (RISE-II) Development Policy Financing

approved

RISE-II is supported under the COVID-19 Crisis Recovery Facility (the Facility) of the Bank and co-financed with the World Bank (WB) as a Development Policy Financing (DPF) under the WB's DPF Policy to further key institutional and policy reforms. AIIB co-financed RISE-I with WB in 2020, which was first in the proposed programmatic series to assist the Government of Pakistan (GoP) strengthen its polices for improved macroeconomic management and business competitiveness in the medium term. The objectives of the second programmatic operation are to strengthen the country's macroeconomic management and support a more sustained and inclusive growth by mitigating the compounded socioeconomic effects of the COVID-19 pandemic and other exogenous and domestic shocks. The proposed operation will provide external financing to help GoP implement critical policy reforms to accelerate economic recovery and build the foundations for sustainable growth. Specifically, RISE-II seeks to further address key institutional and policy constraints for effective fiscal management and private sector investments to induce economic growth and reduce poverty by (i) enhancing the policy and institutional framework to improve fiscal management, and (ii) improving the regulatory framework to foster growth and competitiveness. Reforms supported by the programmatic series are relevant to current economic challenges and have already contributed to important outcomes of strengthening institutions for fiscal and debt management, broadening tax base and reducing distortions, eliminating trade barriers, and rationalizing power sector subsidies.