PK Fiscally Sustainable and Inclusive Growth DPC

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This memorandum describes the first fiscally sustainable and inclusive growth (FSIG-I) single-tranche reform loan for United States (U.S.) 400 million dollars equivalent to the Islamic Republic of Pakistan. The FSIG series has two broad objectives: fostering private and financial sector development to bolster economic growth, and mobilizing revenue while preserving priority use of fiscal space. In this way, the operation contributes to the government's strategy for accelerating economic growth, ensuring fiscal consolidation, increasing investment, and enhancing the openness of the economy to domestic and external competition. A programmatic approach is presented to carry on reform momentum and strengthen reform incentives during times in which political incentives for reforms are typically high due to election results. The first peaceful transition from one democratically elected government to another in Pakistani history has given the incoming administration a solid reform mandate. The overall Bank contribution in International Development Association (IDA) budget support to the program is a commitment of at least U.S. 1.5 billion dollars over three years, provided the economic program remains on track and the government meets the development policy credit (DPC) conditions. The ambitious reform program is strongly supported by the government, key stakeholders, and donors.