With its key geographical position and its vast young population (approximately 208 million) Pakistan has the potential to become a strong economic force in the wider region. However, the country still faces substantial challenges.
Over the last 15 years, Pakistan’s population has been enduring severe security issues, triggered by the post 9/11 war on terrorism. The country is particularly vulnerable to the effects of climate change and suffers from growing environmental degradation. Natural disasters have repeatedly affected the national economy, such as the earthquake in 2005 and major floods in 2010 and 2022.
Structural poverty and semi-literacy among the young population remain a challenge, especially in marginalised areas such as Khyber Pakhtunkhwa and its newly merged districts, Balochistan and inner Sindh.
Pakistan is a major development partner of the EU, with one of the largest programmes in Asia. For the 2021-2024 period, the amount available for bilateral cooperation with Pakistan is €265 million, including a bilateral investment allocation of €53 million.
EU-Pakistan cooperation priorities focus on
- green inclusive growth (67% of the budget)
- human capital (16%)
- governance, including rule of law and human rights (18%)
This is complemented by regional and thematic programmes related, for example, to migration.
Green inclusive growth
The focus is on economic sectors with high potential for job creation, fostering business development in an inclusive manner and ensuring sustainable natural resources management. Access to critical production factors such as clean energy and water are also supported.
The first two programmes of the Multiannual Indicative Programme (MIP) 2021-2027 cover the provinces of Khyber Pakhtunkhwa (KP) and Gilgit-Baltistan (GB).
The KP Rural Economic Transformation Project (€17 million) will create opportunities for agribusiness development and job creation and improve basic services delivery for agricultural development. The Energy for Climate Resilience programme (€30 million) will contribute to step up efforts on climate change adaptation and mitigation by increasing access to clean energy to foster inclusive and sustainable growth.
Education and vocational training
EU support to government reforms on technical and vocational education and training has directly benefitted some 250 000 people. Thanks to a national qualifications framework, 1 200 enhanced, standardised training courses provide young people with recognised qualifications. The upcoming EU programme in vocational training (€40 million) under the 2021-2027 MIP will benefit at least another 25 000 young people by providing them with employable skills.
The EU has been enabling thousands of children to get quality education, even in times of crisis. A special focus is on Sindh and Balochistan, with over €86 million made available since 2014.
Good governance, rule of law and human rights
The EU supports both the supply and demand sides of the rule of law by strengthening justice and law enforcement institutions; promoting citizens' rights with a strong focus on women and marginalised groups; and by deepening efforts to secure peace and stability, notably in Khyber Pakhtunkhwa and its newly merged districts, and in Balochistan.
Support measures and Team Europe Initiatives
The MIP will also support measures in favour of civil society, specifically in the areas of strengthening civil society organisations and the empowerment and participation of youth, girls and women. Support measures have a budget of €8 million (3% of the total) between 2021-2024.
Team Europe Initiatives will support Pakistan on its green recovery path by collectively investing in and transforming sectors to achieve sustainability and generate green jobs for the growing youth bulge (in collaboration with Germany, the Netherlands, France and Italy).