ISLAMABAD, Mar 17: The World Bank (WB) on Wednesday approved a loan of worth $450 million to help the poorest and most vulnerable people in Pakistan as Islamabad has implemented tough conditions of the bank.
Last month, Finance Minister Ishaq Dar had written a letter to WB President Jim Yong Kim requesting him to release a loan for Pakistan as the country has met all the conditions. The government had implemented (WB’s) conditions including approval of a law against money-laundering, Benami transactions and new companies bill from Parliament. Similarly, the government had also established Pakistan Infrastructure Bank and conversion of State Life Insurance Company (SLIC) into a company as part of corporatisation.
The loan would help in mooring the country’s foreign exchange reserves, which are sharply depleting due to repayment of external debts. Pakistan’s reserves currently stood at $22.27 billion, of which $17.24 billion held by the State Bank of Pakistan and $5.04 billion by commercial banks.
The approved loan consists of $300 million for supporting Pakistan’s efforts in promoting a more inclusive and transparent financial sector, $100 million for the National Social Protection Programme and $50 million for the Punjab Tourism for Growth Project. The initiatives include expanding banking services and financial access, strengthening the social safety net to improve the quality of coverage to those who need it most, as well as promoting tourism for growth in Punjab through encouraging private-sector development to provide more opportunities.
The Finance for Growth Development Policy (FGDP), for which $300 million has been approved, aims to raise financial access to 50 percent of adults including 25 percent women by 2020. Similarly, in the next three years, it aims to boost private sector credit access to small and medium enterprises to 15 percent from 7 percent in 2015.
“Pakistan has made significant progress in the implementation of economic reforms”, said WB Country Director Illango Patchamuthu. “However, despite the substantial progress in the initial reform programmes and recent developments in the financial sector, there remains an important unfinished reforms agenda, as financial access and inclusion remain particularly low. About 100 million adults in Pakistan don’t have access to formal and regulated financial services. This number represents about 5 percent of the world’s unbanked population. This needs to change for Pakistani women and men to realise their aspirations”.
The $100 million National Social Protection Programme for Results will assist the government to strengthen the national social safety net systems for the poor to enhance their human capital and promote beneficiary families’ access to complementary social and productive services. It will support the Benazir Income Support Programme (BISP) to update the National Socio-Economic Registry – the national platform to objectively identify the poor for cash transfers and other social programmes, and incentivise improvements in the service delivery systems.
Besides protecting the poorest against falling into destitution and invest in their children’s education, it will facilitate in finding pathways towards their enhanced welfare and economic self-sufficiency.
Additionally, the Punjab Tourism for Growth Project will provide $50 million to strengthen institutions, increase private sector participation, and improve infrastructure to support the tourism sector in the province. It will enable the private sector to lead the development of the tourism market and ensures that public institutions help facilitate these processes while fulfilling their respective mandates.
The project will also help improve service quality, provide better skills development opportunities, foster stronger governance, and give residents a more prominent say in local development plans with a special focus on providing more jobs for women. The credit is financed from the International Development Association, the WB Group’s grant and low-interest arm.