WB remains our largest partner, says ministry

The Ministry of Economic Affairs on Friday rejected a misleading media report which, it said, misrepresented facts about Pakistan's financial engagement with the World Bank (WB) and its impact on the country's development programmes.

It said that the report, referring to the cancelation of a loan which was never approved by the WB Board or signed by the government, was utterly misleading and false. The report, it added, was published without seeking perspective of the ministry of energy and the ministry of economic affairs.

"The World Bank remains Pakistan's largest multilateral development partner, with an active portfolio of 53 projects worth $15.33 billion," the ministry said in a statement. "Since 1950, the WB has provided Pakistan with over $46 billion in financial assistance," it added.

The ministry further said that the World Bank supported Pakistan through various financing instruments, including Investment Project Financing (IPF), Programme for Results (PfR), and Development Policy Financing (DPF).

Since 2009, the WB has provided DPF support to Pakistan for 12 programmes worth over $5 billion in critical sectors such as revenue and finance, energy, social safety nets, and human development, the statement continued.

Among the key DPFs signed in recent years were the Securing Human Investments to Foster Transformation–Development Policy Financing (SHIFT-I & II), which amounts to $900 million to strengthen health, education, and civil registration systems; Resilient Institutions for Sustainable Economy (RISE-I & II) worth $850 million to support fiscal management and competitiveness reforms; and the Programmes for Affordable and Clean Energy (PACE) worth $400 million to reduce circular debt, decarbonise the energy mix, and improve distribution efficiency, it added.

The World Bank's Programme for Affordable and Clean Energy (PACE) was initiated in 2020 as a budget support programme, and all prior actions required under PACE-I were completed successfully, including tariff revisions with IPPs, approval of the National Electricity Plan, and subsidy rationalisation.

PACE-I, worth $400 million, was approved by the WB Board in June 2021 and disbursed accordingly. The second phase, PACE-II, was never initiated, as the focus of the WB support shifted to investment projects, including the $1 billion financing for the Dasu hydropower dam and support for power distribution and transmission reforms, the ministry statement said.

There was no decision to cancel PACE-II, as it was never prepared in the first place, therefore, the claims made in the report were misleading and misrepresented the facts, particularly regarding the ongoing successful reforms in the energy sector supported by the World Bank, the statement said.

"However, the Government of Pakistan has recently shifted its focus from DPFs to IPFs, driven by urgent infrastructure needs in the Power Sector. These include improving generative capacity, enhancing transmission efficiency, and minimising line losses," the ministry stated.

"As a result, the PACE-II programme was never part of the budget estimates for FY 22, 23, or 24 and has had no impact on the country's external financing requirements or budgetary support from the World Bank," the statement added.

In the past few months, the World Bank's support to Pakistan has primarily been directed toward the IPFs. "The Government of Pakistan has successfully secured record disbursements of over $2 billion in the last two consecutive years, with a target to achieve similar disbursements in the current fiscal year."

The ministry of economic affairs said that it is also negotiating projects worth approximately $1.5 billion during this fiscal year. The ministry viewed the media report as a misrepresentation intended to cast doubt on Pakistan's successful engagement with the International Monetary Fund (IMF) and its positive impact on macroeconomic indicators. "It also seeks to create unnecessary concerns about Pakistan's excellent partnership with the World Bank," the statement said.

"The Government of Pakistan reaffirms its strong and productive partnership with the World Bank and remains committed to furthering the country's development through continued collaboration on key infrastructure and energy reforms."