ISLAMABAD (APP) – The World Bank has approved financing worth $1.02 billion under different financing instruments to support the deepening of Pakistan’s economic reforms and to strengthen the capacity of Sindh province to deal with natural disasters.
The Competitiveness and Growth Development Policy Financing (CGDPF) would support the Government of Pakistan’s efforts to encourage economic growth and investment for reducing poverty and building shared prosperity, Illango Patchamuthu, World Bank’s Country Director for Pakistan, said in a statement issued on Wednesday.
“The Government of Pakistan has made significant progress in stabilizing the economy, initiating reforms for revenue mobilization and drawing in the private sector for spurring growth,” said the WB director, who added that the organization was now stepping up efforts through deeper reforms and an accelerated pace of implementation. He was of the view that this would improve the competitiveness of the economy, which in turn would create more and better jobs, lifting millions out of poverty.
The CGDPF, he said, would provide $920 million in budget support to improve the business environment and strengthen fiscal management in the country. The financing combines a credit of $500 million and a World Bank guarantee of $420 million, he added.
“The operation will support reforms that contribute towards accelerating growth and fostering an inclusive growth pattern,” said Enrique Blanco Armas, Task Team Leader of the Project. “Reforms supported will improve the business environment and contribute to the development of the financial sector and reforms of state owned enterprises. The operation also supports efforts for improved fiscal management through increased revenues, better coordination of debt management and making public spending more pro-poor.”
The World Bank guarantee is an innovative instrument that will support Pakistan’s access to international markets to meet its budgetary financing needs, he added.
The World Bank will guarantee up to $420 million of financing to be raised by Pakistan, improving the terms under which the Government of Pakistan can access international financing, and freeing domestic resources for private sector investment.
The Sindh Resilience Project (SRP) worth $100 million aims to reduce flood and drought risks in selected areas of the province in addition to strengthening the province’s capacity to manage natural disasters.
“The project would contribute to reduction in vulnerability and risk in Sindh through a combination of physical works, strengthening fiscal resilience, and institutional development activities,” says Haris Khan, Task Team Leader of the project.
An estimated 5 million people in urban and rural areas will be directly benefit from protections against frequent river flooding events.
In addition, an estimated 65,000 people who are currently exposed to drought and food insecurity, will also directly benefit from the construction of small dams for rain water harvesting and the recharging of groundwater aquifers.
The CGDPF’s Development Policy Credit will be financed from the International Development Association (IDA), the World Bank’s grant and low interest arm.
The credit will be on standard IDA terms with a maturity period of 25 years and a grace period of 5 years. On the other hand, the SRP will have a maturity of 24 years, including a grace period of 5 years.