WB approves $300m for commodity financing

Import of 150 items will be reimbursed under the aid.

ISLAMABAD: The World Bank has approved $300 million in commodity financing for the aid of flood victims.

A senior official of the ministry of finance informed The Express Tribune that the country has received relevant documents from the WB which have been sent to the law division for vetting. The official explained that the aid will be in the shape of a soft loan and that the WB has also sent a list of around 150 items to Pakistan. The expenses incurred in the import of these items will be reimbursed by the WB.

He explained that Pakistan had commodity financing rights from the Islamic Development Bank before this too. He said that the list contains all items except for nuclear and defence equipment and that commodity financing is used usually for the import of oil.

The official said that the list includes medicines, oil, equipment and tools, among other items. Expenditure on these items will be reimbursed by the bank and Pakistan will repay the loan on agreed upon terms.

The newly announced commodity financing will be used to provide fiscal support and to reduce expenditure, said the official, adding that a memorandum of understanding is likely to be signed after the law division completes its vetting.

He said that this aid is the first stage of assistance provided by the WB to the country in its reconstruction and rehabilitation efforts after the floods and hoped that the second stage was not far away.

The country has expressed the hope that the WB relaxes its terms and interest rates for the loan so that reconstruction and rehabilitation efforts are not affected and repayment is within the country’s means.

Sources have also said that another review mission of the WB will visit the country soon to check progress on the disbursement of funds to flood victims.

Published in The Express Tribune, November 30^th, 2010