ISLAMABAD, Jan 27: Pakistan signed an agreement with the World Bank on Tuesday for a soft loan of $500 million for launching various programmes for poverty alleviation.

The releasing of the loan will be made in a single tranche after formal approval by the board of the World Bank, which is scheduled to meet on February 15.

Secretary Economic Affairs Division Farrukh Qayum and a representative of the World Bank signed the agreement. Adviser to Prime Minister on Finance Shaukat Tarin was also present on the occasion.

The WB will provide the loan on nominal service charges on a maturity period of 35 years with an additional grace period of 10 years.

Under the proposed programme, the loan will be used to improve the infrastructure under the National Trade Corridor (NTC) programme to improve trade flows, lower transit costs and development.

All the conditions that Pakistan has agreed with the Intentional Monetary Fund (IMF) as part of $7.6 billion bailout package would also apply to the World Bank loan.

Under the agreement with the WB, Pakistan will have to eliminate subsidies on power sector by end June 2009 and also introduced procurement reforms in Public Procurement Regulatory Authority (PPRA).

Moreover, Pakistan will also have to improve social security network and to rationalise the development expenditures.

The World Bank has also recommended to the finance ministry to reduce the burden of through forward liabilities the funding of ongoing project in coming years that currently estimated at Rs2 trillion.

The through forward liabilities include the funding of ongoing projects that the government would have to continually finance in the next 10 years.