Pakistan Secures $102 Mln World Bank Loan for Microfinance Expansion & Climate Resilience

KARACHI, March 19, 2025- Pakistan has secured a $102 million loan from the World Bank for  its microfinance expansion and enhance climate resilience under the Resilient and Accessible Microfinance (RAM) Project.

This initiative, part of the World Bank’s 10-year Country Partnership Framework (CPF), aims to strengthen the microfinance sector’s ability to withstand climate risks while increasing financial inclusion for vulnerable populations.

The loan will be disbursed through Pakistan’s Ministry of Finance and the State Bank of Pakistan (SBP), ensuring microfinance institutions (MFIs) can continue providing essential financial services, even during climate-induced disruptions. The project is expected to benefit approximately 1.89 million people, including over 1 million women and 350,000 youth, by improving access to credit and financial stability.

Addressing Climate Risks and Economic Vulnerabilities

The RAM Project draws lessons from Pakistan’s devastating 2022 floods, which severely impacted small businesses, farmers, and low-income households. World Bank Country Director for Pakistan, Najy Benhassine, emphasized the project’s importance in supporting vulnerable communities.

“Microfinance is a critical tool for supporting the livelihoods of vulnerable populations in Pakistan,” Benhassine said. “This project will help strengthen the resilience of the microfinance sector, particularly in the face of growing climate risks, ensuring that the sector can continue to provide essential financial services to those who need them most, especially in rural areas.”

Key Features of the RAM Project

The RAM Project includes several strategic components to enhance the resilience of Pakistan’s microfinance sector:

• Climate Risk Fund: A financial buffer to support MFIs during economic shocks caused by climate disasters.
• Agrotechnology Solutions: Leveraging innovative digital tools to support farmers and small businesses.
• Capacity Building for MFIs: Strengthening financial institutions to improve service delivery and risk management.
• Risk Management Frameworks: Developing policies to mitigate financial instability during crises.
• Recovery Loans: Providing financial support to individuals and small businesses to regain stability after economic or climate-induced disruptions.

International Support and Co-Financing

In addition to the $102millionloan,theprojectisco-financedbya$23 million grant from the Global Shield Financing Facility (GSFF), a multi-donor trust fund supported by Canada, Germany, Japan, Luxembourg, and the United Kingdom.

The RAM Project aligns with the World Bank’s commitment to promoting financial inclusion and climate resilience in Pakistan. By addressing economic vulnerability and climate risks, the initiative aims to create a more robust and inclusive financial ecosystem for the country’s most marginalized populations.

This $102 million World Bank loan for microfinance expansion marks a significant step toward empowering vulnerable communities, particularly women, small farmers, and rural families, while building resilience against future climate shocks.