January 11, 2002	Friday	Shawwal 26, 1422

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ISLAMABAD, Jan 10: The World Bank is considering increasing its annual level of assistance to Pakistan from $500 million to $750 million in the coming fiscal years to help achieve macro-economic stability in the country.

The increased combined funding line could be provided by both the International Bank for Reconstruction and Development (IBRD) and the International Development Agency (IDA), depending on the pace of depth of structural reforms. So far, Pakistan has largely opted for IDA lending which is concessional and is offered on 0.5 per cent service charges.

The bank’s officials said that Pakistan should continue to be a blend country, eligible to seek both IBRD and IDA lendings. In future, Pakistan could seek IBRD lending but it is offered on 6 to 7 per cent interest rate and its repayment time is 18 years compared to IDA’s 45 years.

Another World Bank lending window — the International Finance Corporation (IFC) which is currently focussing on managing its existing portfolio, will consider several new investments in the finance and gas sector where foreign investment is needed to help develop proven gas reserves.

The IFC will explore other opportunities to support private provision of infrastructure if the policy environment improves, and is ready to support the privatisation process through advisory and investment work. In this behalf, Multilateral Investment Guarantee Agency’s readiness to support infrastructure projects also depends on the policy environment and the development effects the project would generate.

Pakistan has been informed that MIGA would like to expand its portfolio into manufacturing, Information Technology (IT) and other priority areas such as Small and Medium Enterprises (SMEs).

Pakistan, which has earlier been disbursed $350 million Structural Adjustment Credit in June 2001 in one single instalment, was likely to be extended SAC-2 of the same amount by the World Bank.

The officials of the ministry of finance were pursuing the issue.

According to the bank, its strategy is to support upfront actions in Pakistan’s evolving reform programme through a combination of lending and non-lending services in support of reforms effort to strengthen governance and the efficiency of the civil service and at the same time help improve delivery of basic services and governance improvements in oil, gas, petroleum, power, banking sectors.

The IFC and MIGA have substantial portfolios with Pakistan. The IFC’s disbursed own account portfolio is $444 million in 48 companies, of which $76 million is in equity and the balance $368 million in loans. Among IFC’s 48 portfolio companies, 8 are in arrears, with principal of $39 million overdue as of end-August 2001.

The IBRD and IDA have approved 96 loans and 144 credits to Pakistan since 1952, totalling about $7 billion and $6 billion respectively. Of these amounts, roughly $3 billion has been repaid. Current total obligations to the bank stand at $7.1 billion, of which $4.2 billion are IDA’s and $2.9 billion are IBRD’s, as of Aug 31, 2001. The IDA credits constituted 58 per cent and IBRD loans 42 per cent of the bank portfolio in fiscal year 2000-2001.