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Islamabad, Pakistan's capital city

The funds will be delivered through three different financial instruments, including $500m worth of concessional credit, a $420m World Bank guarantee and a $100m loan.

Enrique Blanco Armas, task team leader of the project, said the money will work to accelerate growth and foster an inclusive growth pattern.

The bank’s concessional credit and guarantee will be combined for this purpose, with $920m in total available for strengthening the business environment and fiscal management.

Fiscal management will also be improved through increased revenues, better coordination of debt management and more pro-poor public spending, Armas said.

The bank said its guarantee is an “innovative instrument” that will meet Pakistan’s budgetary financing needs and support the nation’s access to international markets.

Up to $420m of financing raised by Pakistan will be guaranteed by the bank, improving the terms under which the government can access international financing and freeing domestic resources for private sector investment.

The final $100m loan is earmarked for reducing flood and drought risks in selected areas of the Pakistani province of Sindh, where it is estimated the project will protect five million people in both rural and urban areas from frequent flooding.

Around 65,000 people in the province are also exposed to drought and are food insecure. The bank said these people will benefit from the construction of small dams to harvest rain water.

The project also hopes to build the capacity of the Sindh province to manage natural hazards. Haris Khan, task team leader, explained that a combination of physical works, strengthening fiscal resilience, and institutional development will reduce the province’s vulnerability.