Ajay Banga says employment growth is vital to turn demographic pressure into dividend
World Bank President Ajay Banga cuts a ribbon during the inauguration of the International Finance Corporation (IFC) office in Karachi, Pakistan February 4, 2026. SOURCE: REUTERS
KARACHI:
Pakistan must create up to 30 million jobs over the next decade to turn its youth bulge into an economic dividend or risk instability and outward migration, World Bank President Ajay Banga said in an interview with Reuters.
Pakistan is entering the implementation phase of a 10-year Country Partnership Framework (CPF) deal agreed with the World Bank last year, while also working with the International Monetary Fund to stabilise its economy. But Islamabad is still facing mounting pressure to deliver sustained growth and jobs.
Read: Ministry mum on UAE debt rollover
“We’re trying to move the bank group as a whole from the idea of projects to the idea of outcomes,” Banga told Reuters in Karachi during a visit this week to Pakistan.
“Job creation is the North Star.”
‘Generational challenge
Pakistan needs to generate 2.5 million to 3 million jobs a year – roughly 25 to 30 million over the next decade – as millions of young people come of age, Banga said. Failure to do so could fuel “illegal migration or domestic instability”.
Banga said Pakistan’s population dynamics mean employment creation will remain a binding constraint on growth over the long term, rather than a secondary policy goal.
“This is a generational challenge,” he said.
The CPF commits around $4 billion a year in combined public and private financing from the World Bank Group, with roughly half expected to come from private-sector operations led by the International Finance Corporation.
Banga said the reliance on private capital reflects a country where the government has limited spending capacity and 90% of jobs are created in the private sector.
Pakistan’s job strategy rests on three pillars, Banga said: investment in human and physical infrastructure, business-friendly regulatory reforms, and expanded access to financing and insurance, particularly for small firms and farmers that typically lack bank credit.
Read more: CPEC 2.0 to hail industrial phase
Infrastructure, primary healthcare, tourism and small-scale agriculture were labour-intensive sectors with the greatest employment potential, he said, adding that farming alone could account for about one-third of the jobs Pakistan needs to create by 2050.
A growing pool of freelancers also highlighted Pakistan’s appetite for entrepreneurship, but they need better access to capital, infrastructure and support to scale into job-creating businesses, he said.
The strain is readily visible in the exodus of skilled workers. Nearly 4,000 doctors emigrated from Pakistan in 2025, the highest annual outflow on record, according to Gallup Pakistan data based on Bureau of Emigration figures, underscoring concerns that weak job prospects and poor working conditions are pushing trained professionals abroad.
Power first
Fixing Pakistan’s power sector is the most urgent near-term priority, Banga said, noting that losses and inefficiencies in electricity distribution have limited growth despite improvements in generation capacity.
Pakistan’s power sector has long been plagued by growing debt from distribution losses, weak bill recovery and delayed government subsidies, which have strained public finances and discouraged private investment. The debt has been a recurring focus of IMF-backed reform programmes, with successive governments struggling to contain losses while keeping energy affordable.
Banga said progress on privatisation and private-sector participation in electricity distribution would be critical to improving efficiency, reducing losses and restoring the sector’s financial viability.
He said rapid rooftop solar adoption, while easing energy costs for households and businesses, risks creating grid instability if distribution reforms are not accelerated.
“Electricity is fundamental to everything – health, education, business and jobs.”
Climate by design
Banga said climate resilience should also be embedded into mainstream development spending rather than treated as a standalone agenda.
Pakistan is among the world’s most climate-vulnerable countries, hit repeatedly by floods, heatwaves and erratic monsoons.
Also read: Faisalabad maps 1,460 sewage ponds
Banga said climate-resilient investments should be integrated into infrastructure, housing, water management and agriculture to support jobs while reducing long-term risks.
“The moment you start thinking about climate as separate from housing, food or irrigation, you create a false debate. Just build resilience into what you’re already doing.”
Asked how Pakistan fits into the World Bank’s global portfolio, Banga said he does not view the country through labels such as fragility or crisis, but as a long-term job-creation opportunity.
“We’re in the business of hope,” he said.
