Pakistan expects to secure around $12 billion loans from the World Bank Group over a period of five years under a new partnership strategy, which the Washington-based lender may approve by May this year.
Minister for Economic Affairs Makhdoom Khusro Bakhtiar and World Bank Country Director Najy Benhassine discussed the development priorities of Pakistan for the next five years, according to a handout issued by the ministry after the meeting.
A senior ministry official said that there were no firm financial commitments by the World Bank at this stage. He said that based on Pakistan’s quota, budget support needs and borrowings by the private sector, the total lending from 2022 to 2026 could be around $12 billion.
Under the IDA-19, Pakistan’s quota is $3.5 billion over a period of three years. The lending by the International Bank for Reconstruction and Development – another World Bank arm, could also be in the range of $3 billion over the next three years, said the official.
The official said that Pakistan has urged the World Bank to focus its interventions only in few areas where meaningful impact could be made and at the same time the loans are not spread out in small projects.
The World Bank is expected to complete consultations with Pakistan by end of next month and its board may approve the new five-year lending plan in May this year, according to the official.
Pakistan has remained dependent on the multilateral lenders to meet its budget financing and development needs. The World Bank and the Asian Development Bank extend long-term loans at both concessional and relatively expensive rates. But their expensive loans are cheaper than the debt being raised through commercial bank borrowings and by floating sovereign bonds.
Restoring macroeconomic stability, improving energy sector performance, strengthening public governance and improving management of water resources would remain the top priorities of the World Bank in Pakistan, said the government official.
However, these areas have always remained in focus and yet no major improvement has been made despite pumping in billions of dollars.
As many as 27% children are out of school in Pakistan compared with 22% in sub-Saharan Africa and 38% children under five are stunted.
Pakistani authorities have urged the World Bank to focus only in few priority areas. It was discussed during the meeting that this time focus could be on only six principal indicators, where the World Bank lending can make a difference.
The World Bank is already financing 58 projects worth $12 billion and programmes in Pakistan. The lender is currently reviewing the implementation of 2015-21 country partnership strategy. About $4.2 billion worth of projects and programme loans remain undisbursed under the 2015-21 country partnership strategy that is going to expire this June. However, some of these unapproved funds would be released under the new strategy, subject to fulfilment of conditions.
The Washington-based lender has identified lack of resources and unskilled human resource among the key constraints to economic growth in Pakistan.
In its new strategy, the World Bank is again targeting areas like improving competitiveness, harmonising tax policy, improving tax administration and reducing anti-export bias.
The World Bank country director informed the minister that the lender had started countrywide consultations with key stakeholders, including government, parliamentarians, private sector, civil society organisations and development partners to gather diverse views from stakeholders on Pakistan’s economic and social challenges and the ways in which the World Bank Group can support the government in addressing these challenges.
Najy shared that the next World Bank Pakistan Country Partnership Framework would broadly focus on four strategic areas ie education, health, environment and growth and improved governance as an enabler. The minister for economic affairs highlighted the need to focus more on basics where Pakistan critically lags eg human capital, poverty alleviation, stunting, revenue mobilization and economic reforms, according to the ministry.
Bakhtiar also emphasised on avoiding thin spreading of resources and focus concentrating resources on priority areas for achieving greater impact, it added.
The minister for economic affairs also informed the country director of the government’s desire to enhance the role of private sector and for that the private sector will be encouraged to take lead in economic development of the country.