Govt fails to avail $130m Covid loans

Squabbling among the ministries affects utilisation of funds

ISLAMABAD: The federal government had launched a flash appeal for $595 million to fight against the coronavirus pandemic but failed to avail loans worth $130 million that have either been disbursed or offered by foreign lenders.

The reason behind the inability to make good of this amount – which is around Rs22 billion and nearly 22% of the flash funding appeal that Pakistan’s Foreign Office launched on April 24 in collaboration with the UN – is believed to be “bad governance”.

This comes at a time when Pakistani hospitals lack facilities and patients are not finding space and oxygen.

Squabbling among the ministries of health, climate change, finance and economic affairs has affected the utilisation of funds committed by lenders, according to sources and official documents seen by The Express Tribune.

The World Bank has disbursed $79.5 million for the emergency COVID-19 programme but the actual utilisation remains paltry due to procedural hiccups and absence of local currency cover, according to sources.

Of the $25 million share of the health ministry, the spending was less than $2 million, they added.

Similarly, the French aid agency, Agence Francai De Development (AFD), has offered a $50 million cheaper loan for a health-related emergency, according to official documents.

But the climate change ministry is insisting that the money should be diverted for its livelihood project, which does not fall under the health emergency programme, according to the documents.

Instead of using $50 million proposed loan for combating Covid-19, the climate change ministry wants to use it for the Green Stimulus Package, which is neither the priority of the government nor of the foreign lenders at this stage.

Special Assistant to the PM on Health Dr Zafar Mirza did not respond to a request for his comments on the matter. The climate change secretary also did not respond to the questions sent via a text message.

On April 24, Pakistan launched a $595 million funding appeal, for meeting the country’s urgent needs in the fight against the Covid-19 pandemic and tackling its socio-economic impact. The World Bank and the Asian Development Bank had committed funds. The WB immediately made available $200 million and out of that it disbursed $79.5 million to Pakistan.

The health ministry received $25 million, the National Disaster and Management Authority $9.7 million, Benazir Income Support Programme $25 million and four provincial governments received $5 million each.

A health ministry official dealing with the project refused to divulge the actual spending out of $80 million WB funding but said that the ministry has lately started utilising the funds.

He said of the $595 million flash appeal, the health emergency needs were worth $366 million.

The requirements for which the funding appeal was launched were identified in Pakistan’s Preparedness and Response Plan (PPRP) to combat Covid-19 that has been approved by the Planning Commission in March. The primary objective of the plan is to deal with the immediate and long-term impacts of the Covid-19 crisis on Pakistan’s health sector.

AFD loan

The sources said that the climate Change Ministry wanted that $50 million proposed loan by AFD the for livelihood project. After AFD Country Director Philippe Steinmetz politely refused to give funds for climate change project, the additional secretary of the economic affairs ministry said Pakistan did not require Covid-19 emergency funding.

“The AFD was told that the PPRP was fully financed and that NDRMF does not need more funds,” according to an internal communication of the aid agency seen by The Express Tribune.

The economic affairs ministry has included a very expensive $70 million loan of Islamic Development Bank in its national COVID-19 emergency plan instead of availing the cheaper AFD funding.

The AFD has refused to fund the livelihood activities and asserted that it would finance only health and protection components of the PPRP through “transparent disbursement and mechanisms”.

“The Green Stimulus Package is well considered by AFD for future financing, however, given the following technical challenge, we could recommend considering concurrence of submitted concept paper”, read a letter written by the French aid agency’s country director. The letter was sent to the joint secretary of the economic affairs ministry on June 11.

“The concept paper submitted follows PPRP and AFD appraisal process has already recognised the importance of response to health emergency,” the letter further read.

Last week, the Ministry of National Health Services, Regulations and Coordination also conveyed its concurrence to secure the $50 million French loan for “supporting PPRP for laboratory network, infection prevention and control and case management”, according to the official documents.

A meeting took place on Tuesday at the Planning Commission where it was finally decided that about $22 million of the AFD loan will be utilised for health purposes, said the sources. In the same meeting, the health ministry said it still had a financing gap to fund Covid-19 related activities, said the sources.

The French agency has further stated that given the timeline attached for allocation of $50 million and emergency of disbursement, the AFD will not be able to follow appraisal process for such GSP initiative as it did not see it as part of the health emergency programme.

As per the agreed timelines, the government was required to get the $50 million health emergency project’s concept clearance by the Central Development Working Party by June 17th -a deadline that has already lapsed.

The tentative date of loan approval by the AFD Board is July 9, subject to concept clearance, and ECC’s approval of summary for on-granting loan to NDRMF as grant. The AFD’s date for loan disbursement is the end of July.