Islamabad: For the entire financial year 2016-17, World Bank (WB) has paid out $958m in loans to Pakistan including a policy loan worth $302m. WB also didn’t approve $500m loan for energy sector reforms.
The international lender has also given $200m less to Pakistan under the Fiscally Sustainable Inclusive Growth Development Policy Credit programme, although funding for the Tarbella-IV extension project was higher than the budgeted estimates. According to Ministry of Finance estimates, the disbursements from WB were 37pc or $572m less than expected.
Last week, in order to ease pressure on its foreign exchange reserves, the government obtained a loan worth $700m from Standard Chartered Bank at an interest rate of 4.47pc. World Bank has provided a policy based guarantee for obtaining this loan and is charging a 0.5pc a year fee for it. The overall interest rate payable on this loan would total to 4.97pc a year.
Asian Development Bank (ADB) and WB had extended $2.2b loans to Pakistan for furnishing out energy sector reforms in the last three years. But WB didn’t support the sub-programme-III through which the ADB extended a $300m loan for power sector reforms last month.
World Bank Country Director for Pakistan, Illango Patchamuthu had tweeted last Wednesday “Past week two World Bank guarantees helped Pakistan secure over $1 billion in international commercial financing at very attractive rates.” He added that these loans had helped Pakistan improve market access and better terms, which had helped the country in saving $120m from interest payments and increasing payment period from the usual three years to ten. WB has also extended a $350m commercial loan for the construction of Diamer-Bhasha dam.
Illango commented that Pakistan needed to reform its economy which would help in job creation, decrease poverty and improve shared prosperity. Due to slow disbursements from WB, some projects from Sindh and Punjab also suffered as a result because of their slow progression. Water sector projects didn’t receive any disbursements and Balochistan Integrated Water Resources Project also suffered because of this. The World Bank project for Sindh Enhancement Nutrition for Mother and Children also stalled and didn’t work out according to plan.
Progress remained slow on Sindh Public Sector Management Project, Sindh Integrated Agriculture Productivity Project and Sindh Agriculture Growth Project. Disbursements for Punjab Agriculture Productivity Improvement and Punjab Skills Development Project remained less than what the government had actually forecast.