Pakistan will be granted a $12 billion loan from the World Bank to be disbursed over five years, the country's finance ministry and the global lender said on Friday.
According to Reuters, the money will target "energy, economy, (fighting) extremism and education", with $1 billion being transferred to Pakistan in the next week, the ministry said.
The loan, repayable after 30 years, will carry a 2 percent interest rate.
"The government of Pakistan deserves appreciation for stabilizing the economy, initiating reforms in the power sector as well as revenue mobilization and drawing in the private sector for spurring growth," said Philippe H. Le Houerou, vice president of World Bank Group's South Asia region.
The cash-strapped country has been struggling to deal with a massive energy crisis, high unemployment and a shortfall in tax revenue.
"It has borrowed heavily to pay to cover government expenditure," Reuters reported. "The nuclear-armed nation of 180 million relies on imported oil to run most of its electricity grid, but often cannot afford to pay for it, causing daily power cuts that have damaged many industries."
While $400 million would help "create jobs and economic opportunity for all," a credit of $600 million would be given to reform the power sector, the World Bank said.
Other specific planned projects were not confirmed.
"The power development policy credit is structured around three objectives: targeting power subsidies to the poorest and improving tariff policy, improving sector performance and opening the market to private participation, and ensuring accountability and transparency," the World Bank said.
"The country was facing a balance of payments crisis last year and had only enough cash for one month's worth of imports before the International Monetary Fund approved a loan package of $6.7 billion in September," Reuters reported.
In February, Saudi Arabia gave Pakistan a gift of $1.5 billion. In April, Islamabad raised $2 billion in a Eurobond offering and $1.1 billion from an auction of 3G and 4G telecommunications licenses.
