by Amir Sial
After nearly winding up all the development financial institutions, the cash -strapped government is considering setting up Pakistan Infrastructure Bank (PIB), with the financial assistance of the international financial institutions (IFIs) to finance the mega infrastructure projects.
An official source said that the PIB was planned to be launched in the next financial year to expedite railways, highways, dams and energy projects. The government is discussing setting up of an infrastructure finance bank with IFIs to finance infrastructure projects in the public as well as in the private sector.
The PIB proposal is already approved by the Economic Coordination Committee of the cabinet in its meeting of January 31. The government has proposed to IFIs to set up an institution for financing infrastructure in the private sector and was ready to share equity up to 25 per cent in the institution. PIB will be run as an independent entity and will finance infrastructure projects.
Inadequate investments in the infrastructure sector and a lack of proper maintenance of infrastructure facilities have hampered country’s growth. Pakistan needs to ramp up investment in infrastructure to a level, estimated at 10 per cent of GDP annually, the source said.
The major infrastructure projects, currently under consideration and implementation include China-Pakistan Economic Corridor (CPEC), TAPI gas pipeline, IP gas pipeline, Dasu Hydro Power project, Diamer-Bhasha Dam Project, Gwadar-Nawabshah LNG Pipeline and North-South Gas pipeline project.
Apart from funding provided by federal and provincial budgets, financing was sought from multilateral and bilateral donors, development finance, public finance, commercial finance, as well as financing through capital markets and Islamic finance to meet the infrastructure financing needs.
However, still, a dedicated institution was required to address the long-term financing issues. As debt financing can be provided through multiple instruments with direct loans held on the balance sheets of financing institutions and registered corporate and government bonds.
An official statement said the country director of the World Bank, Patchamuthu Illangovan along with his team called on Finance Minister Ishaq Dar.
The director apprised the minister regarding the plans for establishing the PIB in cooperation with the International Finance Corporation (IFC).
The minister said that, once established, PIB will complement the government’s infrastructure initiatives by enhancing private financing and investment for infrastructure projects in the country.
The World Bank representative also apprised about the work being conducted by the World Bank team to support the efforts of the government for improving data collection methodologies and rebasing the national accounts, in order to present a more accurate picture of Pakistan’s economy. The minister assured all necessary facilitation to the World Bank team for this task.
Referring to the recently concluded Article-IV consultations with the IMF, the minister said that the government is making all necessary efforts to consolidate the economic gains made in the last three and a half years, and achieve higher sustainable and inclusive economic growth. The government is committed to continuing the implementation of reforms in different areas of the economy.
Finance secretary, secretary economic affairs division and other senior officials also participated in the meeting.
