WB approves $300m in credit for import financing

World Bank approves credit line worth $300 million to assist Pakistan’s efforts to respond to the floods.

KARACHI: The World Bank (WB) on Thursday approved a credit line worth $300 million to assist Pakistan’s efforts to respond to the destruction wrought by recent floods. This support is part of the WB’s commitment of $1 billion for recovery and reconstruction in this fiscal year.

The WB had earlier approved $130 million, of which $20 million was from the WB’s commitment for floods, in additional financing for the Pakistan Highway Rehabilitation Project. This brings the total assistance extended by the WB to $430 million.

Recent flooding has affected over 20 million people in all regions of the country. Preliminary figures show that more than 1.8 million homes have been damaged or destroyed, displacing over eight million people.

“The credit is part of the first phase of the World Bank’s strategy to assist with flood recovery in Pakistan,” said Rachid Benmessaoud, the World Bank Country Director for Pakistan.

“The recent floods are of a magnitude and scale that would stretch the capacity and resources of any country and have adversely impacted communities that were already vulnerable,” he added.

The floods have led to a sharp increase in imports, such as food, medicines, tents, construction materials, machinery and fuel. This operation will disburse the full $300 million against imports of these items.

Earlier, the WB had approved a credit line worth $130 million in additional financing for the Highway Rehabilitation Project to continue revitalising and modernising the highway system. Of the $130 million, $20 million is part of the billion-dollar flood package announced by the bank.

Along with the Asian Development Bank (ADB), the WB is also supporting Pakistan by undertaking a Damage and Needs Assessment (DNA) to estimate the damages caused by the floods and to identify immediate, medium and long-term reconstruction priorities.

“The DNA will estimate the damage and needs in key physical, productive and social sectors, as well as cross-cutting areas of hazard risk management, flood management, economic policy and governance,” said Christian Eigen-Zucchi, a co-task team leader.

“It will serve as a critical guide for the design and prioritisation of investment as well as other proposed recovery and reconstruction activities.”

The credits from the International Development Association (IDA), the World Bank’s concessionary arm, have 40 years to maturity with a 10-year grace period and carry a service charge of 0.75 per cent.

Published in The Express Tribune, October 2^nd, 2010.