The World Bank has approved a $520 million package of funding for projects to boost Afghanistan's economy, build critical infrastructure, and support Afghan refugees sent back from Pakistan.

The bank said on June 13 the six cash grants, including donor money from Denmark, Germany, and Japan, will help the Afghan government "at a time of uncertainty when risks to the economy are significant."

Shubham Chaudhuri, the bank's director for Afghanistan, said Kabul faced "daunting development challenges" despite progress at reforming government institutions, generating revenue, and providing health care, education, and other basic services.

NATO forces have been withdrawing troops from Afghanistan since 2011, causing a deterioration of security which has fueled economic uncertainty and slower growth, and added to financial pressures on the government, the bank said.

The Washington-based development bank expects economic growth in the country to pick up this year, but not enough to provide jobs needed by its growing population.

The bank said the funding package will help Afghanistan in particular to cope with an influx of refugees while expanding opportunities for the poor, boosting the development of five provincial capitals, expanding electrification, improving food security, and building rural roads.

The largest chunk of the package, $205.4 million, will go to communities affected by refugees returning from Pakistan. Some 800,000 Afghans have been sent back from Pakistan and Iran, many of them living on subsistence income in rural areas or taking low-paid work in towns.

The funding will help provide shelter, drinking water, food, and short-term job opportunities in public-works projects for the refugees as well as other Afghan residents, potentially affecting 8.5 million people in all 34 Afghan provinces, the bank said.

In addition, $100 million will support business development for the poor and $20 million will go to improving services in the five provincial capitals: Herat, Mazar-e Sharif, Kandahar, Jalalabad, and Khost.

Another $29.4 million of grants will go to establishing a strategic wheat reserve to be used during food emergencies and to upgrading the country's grain-storage facilities.

Another $60 million will be used to expand access to electricity in the western Herat Province, including providing solar power to villages that won't otherwise have access to electricity.

With reporting by Reuters