Pakistan failed to avail the concessionary financing window of the World Bank and has just received a little over half of its estimated cheaper loans of $1 billion in the just-ended fiscal year of 2018.
The International Development Association (IDA)-the World Bank’s concessionary loans arm gives loans to poor-income countries for a longer period at nominal interest rates of around 1.25%.
Pakistan has received $520.6 million in loans from World Bank(IDA) in the fiscal year 2017-18, according to the data compiled by the Economic Affairs Division, reports the express news.
This amount was 54 percent of the authority’s projection of $968 million. Funds released by the International Bank for Reconstruction and Development (IBRD) amounted to $249 million against a budgeted forecast of $68 million.
Instead of going for this low-interest loans from the World Bank, Pakistan availed expensive financing from foreign commercial banks to cover its current account deficit which depicts the stagnant economy policy of the previous government.
The country received $3.7 billion in loans from overseas commercial banks against a budgeted forecast of $1.5 billion. They got the loans from foreign commercial banks for a max duration of three years at an interest rate of London Interbank Offered Rate (LIBOR) plus 3 percent.
For the fiscal year 2017-18, Pakistani authorities had estimated that the international lending institution, would disburse $1.03 billion loans, which includes concessionary loans of $968 million and commercial loans of $68 million. However, actual loans from World Bank remained at three-fourths of the estimates causing a deficit in the federal budget of 2017-18.
A major issue has been of payment of commitment charges on unreleased but approved loans from World Bank for Pakistan. All projects in all sectors have been impacted by delays because of administrative hold-ups and delays in giving contracts.
World Bank released an amount of $132.2 million for Tarbela’s fourth extension scheme.
Punjab and Sindh have been amongst the major beneficiaries of the World Bank-funded projects and some are managed by the federal government. From the $249 million funds released by IBRD, Punjab was the beneficiary of $141 million for four projects.
They released the $62.4 million for education sector reforms in Punjab, $20 million for jobs and competitiveness project, $43.7 million for agriculture transformation project and $14.8 for an irrigation project.
A meager amount of $1.8 million was reserved for the tertiary education project by the previous government but now World Bank is likely to approve huge financing for HEC. Punjab health sector reforms project $15.4 million, Punjab public management project $8 million, national immunization support project $4.7 million and Punjab skills development scheme $6.2 million were placed in the 2017-18 budget by Punjab Government.
Pakistan is among the 25 countries, the World Bank Group and partners are prioritizing as part of the efforts to reach Universal Financial Access by 2020.