Give and take: World Bank poised to enhance assistance to $1.5b

Government promises to undertake long-delayed reforms.

ISLAMABAD:

The World Bank has said it is ready to increase annual assistance to Pakistan to $1.5 billion, almost three times more than what Islamabad received in the last fiscal year, as the country promises to implement long overdue reforms.

The Washington-based lending agency’s top man for South Asia, Phillippe le Houerou, said on Wednesday in view of the economic policies and stabilisation measures undertaken by the new government the bank was now ready to work out a $1.5 billion programme for this year.

Houerou, the new vice president for South Asia, said this in a meeting with Finance Minister Ishaq Dar. He also called on Prime Minister Nawaz Sharif at the Prime Minister’s Office.

The prime minister said Pakistan was currently faced with an energy crisis and would welcome the bank’s investment in the sector to improve living conditions of people, according to a statement issued by the PM Office.

He expressed the hope that the bank would continue extending its support for development projects in the country.

If the World Bank delivers on its promise, its assistance will increase to the pre-2008 crisis level that saw a significant reduction in loans due to the government’s inability to implement critical energy and taxation reforms at that time.



The bank had suspended budgetary assistance, which could be restored following approval of a fresh bailout package by the International Monetary Fund in the first week of September, according to officials. If both the sides agree on modalities, Pakistan will receive approximately $500 million in budgetary assistance out of $1.5 billion, they say.

In fiscal year 2012-13, the World Bank gave $581 million in loans, which was 76% of its commitment of $763 million.

The bank also announced that it would work on the earlier abandoned Diamer Bhasha Dam, according to the finance ministry. The vice president said the Asian Development Bank was carrying out due diligence of the project and once it was completed the World Bank would start work on the project.

Earlier, the World Bank had sought no-objection certificate from India, arguing that the dam was being constructed in a disputed territory. However, Dar said the demand was illegal.

Houerou told the finance minister that foreign investors were interested in investing in Pakistan, especially in the energy sector.

Houerou, who was appointed vice president two months ago, said he chose to visit Pakistan as his first trip because he wanted to have discussions with the new government.

Dar pointed out that the government had increased the Public Sector Development Programme, enhanced the budget for social safety net and was making efforts to bring macroeconomic stability. The country was committed to transparency, financial discipline and good governance, he said.

He said Pakistan was going through a very delicate economic phase, unprecedented in its history. “We were confronted with the twin menace of budget and current account deficits,” he added.

The minister said the government had prepared an economic roadmap keeping in view the ground realities and set targets that were doable.

He stressed that initial vibes after the measures taken by the government were positive, remittances from overseas Pakistanis had increased to a record $1.4 billion last month and the stock exchange was booming.

He said the PML-N government believed in encouraging regional trade and good relations with neighbours as regional cooperation had great potential for accelerating growth in the economies for the betterment of people of this region.

Published in The Express Tribune, August 22^nd 2013.

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