KARACHI/ISLAMABAD - The World Bank has approved $500 million interest free IDA credit to support the Government of Pakistan's programme to regain and maintain economic stability and to bring the economy back to a higher growth path. Pakistan has experienced severe external and internal shocks in the past year and is confronting a very difficult macroeconomic situation. 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. On the internal side, political turmoil and uncertainties affected investor confidence, which together with macroeconomic imbalances, led to capital outflows. World Bank announced on Friday that the Poverty Reduction and Economic Support Operation is designed to support Government of Pakistan's policy measures that promote macroeconomic stability. It also seeks to strengthen Pakistan's competitiveness by bolstering the financial sector and cutting barriers to business entry and exit. "The Government of Pakistan has taken important policy steps to stabilise the economy," said Yusupha Crookes, World Bank Country Director for Pakistan. "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 during the process." The operation also supports measures to ensure that poor and vulnerable people are shielded from major adverse impacts of the stabilisation process. This entails improving the targeting of the government's cash transfer programmes, focusing especially on the Benazir Income Support Programme. "Protecting the country's poor and vulnerable people is essential during the stabilisation process," said Satu Kahkonen, World Bank Lead Country Economist for Pakistan. "One of the key goals of this operation is to improve access to social safety nets for the poorest 25 percent of the population." The reform programme supported by this operation is based on the Government's recently adopted Second Poverty Reduction Strategy Paper. The credit from the International Development Association (IDA), the World Bank's concessionary lending arm, carries a 0.75 pc service fee, a 10-year grace period and a maturity of 35 years. APP: Pakistan and the World Bank here on Friday signed two assignment and release agreements of second partnership for polio eradication projects converting the IDA credit of US $ 67.84 million provided by the bank into grant for polio eradication in the country. The Assignments and Release agreement for partnership for Polio eradication project was signed by Farrakh Qayyum, Secretary Economic Affairs Division (EAD) on behalf of the government of Pakistan and Said AL-Habsy, Acting Country Director, Word Bank on behalf of the bank. According to the agreements, the government of Pakistan and the World Bank signed two assignment and release agreements of second partnership for polio eradication projects for US$46.70 million and Additional Financing for Second Partnership for polio eradication project for US$21.14 million to convert IDA credit into grants here today. The total amount under the both agreements amounting to $ 67.84m was initially provided by the WB under the Second Partnership for Polio Eradication Project to the government of Pakistan, Ministry of Health as a credit in 2007. However, under the buy-down agreement the WB has converted the credit into grant with a support of Bill and Melinda Gates Foundation. The overall objective of the project was to support the government of Pakistan's efforts to eradicate polio and to help supply the Oral Polio Vaccine (OPV) for the country's Supplementary Immunization Activities (AISa). The Polio Eradication Initiative has been a major national effort since 1994. The programme achievement is reflected in declining number of polio cases from tens of thousands per year in the 1980s to 24 cases in November 2005. The International Development Association is supporting Pakistan Polio Eradication initiative in partnership with technical agencies (UNICEF and WHO) and several development partners as the project has successfully achieved the project targets, it will convert the IDA credit into grants which will be financed by the Bill and Melinda Gates Foundation. In his remarks Secretary EAD Farrakh Qayyum thanked World Bank for its continued support to help Pakistan polio eradication. The Acting Country Director World Bank Said Al-Habsy assured the banks commitment to support Pakistan in eradication of Polio from the country. He expressed the hope that this initiative would also help- the country achieve its health targets relating to polio eradication.