World Bank ends budgetary support program for Pakistan

Islamabad: A local newspaper report claimed that World Bank (WB) had ended its budgetary loan programme support for Pakistan, due to worsening macroeconomic indicators.

According to the article, sources in World Bank had informed the Pakistani authorities of ending their budgetary support program, last month.

This decision was taken in context of IMF’s letter of comfort which measures the economic health of a country on basis of macroeconomic indicators, which seems to have sealed Pakistan’s fate.

Pakistan’s forex reserves witnessed a decline of $4.64b during October 2016 and September 15th, 2017. According to another SBP report last week, SBP’s reserves had declined $474m to $14.28b during September 8th-15th.

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To become eligible for obtaining loans through this WB programme, Pakistan will have to ensure that foreign exchange reserves rise to the required level.

WB extends loans in the form of International Bank for Reconstruction and Development International Development Association (IDA).

An end to this budgetary loan programme by WB for Pakistan means the country will only be able to borrow via IDA as per its allowed quota and extra borrowing would only be approved if the macroeconomic indicators see an improvement.

Last month, Profit had reported of IBRD’s assurance that it won’t be dropping financial support to Pakistan for ongoing projects even if it does not meet the requirements.

Back then, a WB spokesman in Islamabad had said Pakistan was in category of a blend country and qualified for both IBRD and International Development Association (IDA). He said in case a country’s status gets downgraded, the projects being supported financially aren’t impacted.

 

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