World Bank okays nearly $150m loan

Includes $78m for digital economy enhancement, $71.7m for barrage upscale

ISLAMABAD:

The World Bank has approved nearly $150 million in loans for two projects, including $72 million in additional funding for a scheme plagued by delays and loan cancellations.

The Board of Directors of the World Bank approved the Digital Economy Enhancement Project costing $78 million amid a ban on the use of X platform in Pakistan. The Washington-based lender also approved additional financing of $71.7 million for the Sindh Barrages Improvement Project, according to a press statement issued by the WB local office.

“The catastrophic floods that hit Pakistan in 2022 were a tragic reminder of the importance of building resilience to such disasters, including by strengthening barrages and their management,” said Najy Benhassine, World Bank Country Director for Pakistan.

He stressed that supporting the growing digital economy in Pakistan is crucial for economic and social development, broadening connectivity, and providing access to government and financial services for citizens and entrepreneurs, particularly women.

Pakistan has taken the $78 million loan to enhance the government’s capacity for digitally enabled public service delivery for citizens and businesses. The project will facilitate digital transactions initiated by individuals to access public and private sector services.

The World Bank and the government are collaborating to deepen digital service delivery at a time when there is a ban on the use of X, formally Twitter. The government has not provided any justification for placing unannounced restrictions on the use of the microblogging website.

The Digital Economy Enhancement Project (DEEP) will develop digital authentication and data-sharing platforms to enable Pakistan to respond more effectively and efficiently to shocks, deliver better e-government services to citizens and firms, and support regulatory reforms in the sector, including enabling greater private participation and strengthening personal data protection and online safety, according to the project documents.

The project will also promote financial inclusion by enabling women, in particular, to open bank accounts or apply remotely for credit through a smartphone application. It will also address barriers such as limited mobility and digital literacy.

Of the $78 million, $5 million or 6.4% of the total project cost will be spent on setting up a project management unit.

“The digital economy and demand for digital government services have been growing across the country, increasing the need for connectivity, digital payments, and secure and trusted digital transactions,” said Shan Rehman, task team leader for the project.

The World Bank highlighted that Pakistan lags on most digital development rankings relative to regional comparators, particularly on digital infrastructure connectivity, digital government, and the enabling environment for the digital economy. It underscored the need to ensure that the use and reuse of data are not unduly restricted through data localisation requirements.

Despite the availability of policy instruments at the federal and provincial levels, the responsible institutions lack adequate implementation capacity, resulting in missed opportunities across various subsectors.

Federal and provincial government agencies have rolled out some digital services, though they remain limited. These services vary in degree of maturity and often lack key elements such as interoperability, privacy and security by design, secure and inclusive identity authentication for transactions done remotely, and limited integration between federal and provincial IT systems.

The World Bank approved $71.7 million as second additional financing for the Sindh Barrages Improvement Project to support the full completion and commissioning of the Guddu and Sukkur barrages rehabilitation works and improve the management of three barrages in Sindh including Guddu, Sukkur, and Kotri.

The project documents stated that the rehabilitation of Guddu and Sukkur barrages have suffered significant delays due to several factors, including procurement delays due to bidder complaints resulting in court-ordered stay orders, delays in securing the contractor’s campsite and the right-of-way, change in the method of rehabilitation.

In 2021, the World Bank had cancelled a $30 million loan component at the request of Pakistan due to savings from exchange rate gains at that time. In the same year, Pakistan and the World Bank also agreed to cancel another $78.5 million loan for the project.

The World Bank stated that the additional financing will close a funding gap caused by a previous partial cancellation of the original credit and cost changes. The additional loan also comes with a restructuring of the parent project. The project completion period has been extended by four years to June 2028.

The project objectives, scope, and implementation arrangements remain unchanged, and there will be continuity of the World Bank’s safeguards policy, said the World Bank.

Published in The Express Tribune, March 24^th, 2024.

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