Pakistan hopes to receive nearly $1 billion more in disbursements by December this year from foreign creditors out of nearly $11 billion in Geneva pledges for floods amid a renewed push for early finalisation of the projects.
The chances for materialisation of $1.2 billion per annum financing for oil purchases by the Islamic Development Bank (IDB) have also increased after a new deal with the IMF. The IDB had committed $3.6 billion in oil financing over a period of three years and another $600 million in project financing.
Out of $3.6 billion, the IDB’s plan was to raise $3.3 billion from the markets and re-lend to Pakistan. However, due to Pakistan’s poor credit rating, this facility was in jeopardy.
Prime Minister Shehbaz Sharif, on Tuesday, chaired the third Meeting of International Partners Support Group (IPSG) in Islamabad to review the disbursement status.
The PM was further informed that discussions with IDB for additional financing of $400 million were ongoing. PM Sharif had requested the IDB president last month for the additional financing on the sidelines of Paris meetings.
The premier was informed that the country has so far received over $700 million from foreign creditors against the pledges made in Geneva this year.
In Geneva, Pakistan had received pledges equal to $10.8 billion against the requirements of about $16 billion for the rehabilitation and reconstruction of the 2022 flood-affected areas.
The Ministry of Economic Affairs further informed that another over $900 million to close to $1 billion might be received by December this year. Out of $900 million, $600 million alone would be disbursed by Saudi Arabia against the oil financing facility.
The disbursements, including expected ones until December, are mostly against non-climate change activities, like oil financing.
Saudi Arabia had committed $1 billion, and it has already disbursed $400 million, providing face-saving to the government.
The country director of the World Bank acknowledged the fast-track approvals of the projects.
The WB had committed $2.2 billion, and out of which, over 13 agreements worth $2.1 billion have been signed. The disbursements would depend on implementation on these schemes, which are mostly in Sindh.
During the meeting, PM Sharif emphasised the need for early finalising the projects so that these could be offered to foreign creditors for financing. The meeting was informed about the status of the projects that the lenders would fund against their commitments.
The Ministry of Economic Affairs notified IPSG on March 17, 2023. It is a 41 members group comprising of federal ministries and international development partners. The Minister for Economic Affairs is the convener of IPSG, whereas UNDP Pakistan provides the secretariat support.
The meeting was attended by a large number of bilateral and multilateral development partners and senior diplomats, including ambassadors. The PM hoped that IPSG would ensure timely securing financial and other commitments for the implementation of climate-resilient projects over the coming years.
The 2023 floods had caused a wide scale of destruction and human suffering. The needs assessment report had estimated the cost of rehabilitation and reconstruction around $16 billion. Pakistan is expected to fund the remaining project from its budget.
Last month, PPP had threatened not to cast its vote in favour of the budget over a dispute on floods related budget allocations.
The PM was informed that the international financial institutions have made $7.4 billion financing by mostly diverting resources from existing pipelines. Out of which, about 18 projects worth $4.3 billion have been approved.
The ADB had committed $1.6 billion in Geneva. So far, six agreements worth $561 million are finalised. The discussions for the remaining were going on, the meeting was informed.
China and AIIB had committed $1.1 billion. The AIIB would disburse $250 million once the WB approves a budget support loan. The government officials said that a Chinese delegation was in the town for discussing projects worth $850 million.
The Paris Club countries had pledged $863 million, but so far, only three agreements worth $94 million could be signed. Another 10 agreements worth $411 million were at advanced stages.
Published in The Express Tribune, July 26th, 2023.
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