World Bank approves $500 mn loan for Pakistan

Washington, March 27 (IANS) The World Bank has approved a $500-million interest-free loan to help stablise Pakistan's economy, Geo TV reported Friday.

'Pakistan has experienced severe external and internal shocks in the past year and is confronting a very difficult macro-economic situation,' the Washington-based World Bank said in a statement.

'The rise in international oil and food prices sharply inflated the country's import bill and the subsequent slowdown in the global economy dampened external demand for Pakistan's exports.'

It noted that 'political turmoil and uncertainties affected investor confidence', leading to capital outflows.

The Poverty Reduction and Economic Support credit is designed to support measures that promote macro-economic stability, the Bank said.

It also seeks to improve Pakistan's competitiveness by bolstering the financial sector and cutting barriers to business.

'The government of Pakistan has taken important policy steps to stabilise the economy,' World Bank director for Pakistan, Yusupha Crookes, said.

'These polices have succeeded in reducing external imbalances, rebuilding foreign exchange reserves, narrowing fiscal overruns, and lowering inflation.

'However, the sharp deterioration of the global economy poses significant risks to exports, remittances, and external financing. This underlines the importance of Pakistan regaining economic stability and protecting its poorest citizens in the process.'