WB ratings downgrade

World Bank lowers rating of $100 million project in Punjab

The lower your rating the riskier you are deemed to be. This axiom will apply on a key project designed to reduce poverty and unemployment, whose rating the global banking lender has downgraded.

The World Bank has lowered the rating of a $100 million project, which it is financing in Punjab to cut poverty and joblessness, due to the provincial government’s failure to approve a spatial strategy. Punjab Jobs and Competitiveness Programme for Result has been downgraded to ‘moderately satisfactory’ after its sixth review held recently, according to the World Bank’s Status and Result Implementation Report.

The objective of the project is to contribute to the competitiveness of Punjab by reducing the cost of doing business and improving the hard and soft infrastructure in support of industry. The loan is also aimed at supporting the industrial development objectives by improving business environment regulatory reforms.

These reforms have been planned to remove impediments to swift business registration, getting permits and licensing, contract enforcement and property registration. In March 2016, the Washington-based lender had approved $100 million under its hybrid financing instrument Programme for Result (PfR). The PfR disbursements are linked with progress on implementation of agreed set of conditions that makes it different from usual budget or project financing.

The steps towards developing and implementing the Provincial Spatial Strategy are facing delays as they are yet to be approved by the provincial cabinet, according to the World Bank’s report. The due date for approval of the strategy was October last year. The government of Chief Minister Usman Buzdar has also delayed the development of operating procedures and regulatory framework for enforcement of the spatial strategy.

The World Bank had approved the loan as part of a reform package that was ultimately aimed at lowering poverty and unemployment rates. So far, the World Bank has disbursed $40 million under the programme. The future disbursements would be linked with fulfilling the conditions that had been agreed at the time of signing of the programme.

Published in The Express Tribune, March 25^th, 2019.

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