February 15, 2003	Saturday	Zul Hijjah 13, 1423

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ISLAMABAD, Feb 14: The World Bank has suspended visits of its various missions to Pakistan till early March due to fear of the United States attack on Iraq.

Sources in the international donor agencies told Dawn here on Friday that the World Bank has decided not to send any mission between middle of February and early March to Pakistan.

The government has been informed that travel advisories had been changed keeping in view the growing threat of war in the region.

Nonetheless, sources said the Asian Development Bank (ADB) has not as yet decided to suspend the visit of any of its mission to Pakistan. The senior officials of the ADB are seeking advice of the United Nations whether to change the travel plans for the bank’s staff and other associated members.

The World Bank is expected to start dispatching its various missions to Pakistan in late March so that Pakistan could continue receiving roughly $800 million assistance annually.

But for new lending, the bank is updating its operational policy-based adjustment lending for Pakistan to effectively alleviate poverty which continues to increase despite allocating substantial funds during the last three years.

Following a comprehensive stocktaking of past bank adjustment lending during 2001, it has prepared an “issue paper”, the fundamental aim of which is to help poor people by making the bank a more effective development partner and its policy-based lending a better instrument for poverty reduction.

The bank has sought suggestions from NGOs, civil society groups and other stakeholders for restructuring the public consultation process on the update of the adjustment lending policy guided by the objective of a full, open and transparent view.

According to various documents made available to Dawn, the adjustment lending is a fast disbursing policy-based lending to support member countries, including Pakistan, with external financing needs in developing and implementing policy measures and institutional reforms.

The bank’s Articles of Agreement provide that its loans should finance specific projects, “except in special circumstances”. Special circumstances have been broadly interpreted to mean such circumstances as may, in the judgment of executive directors, justify a departure from the general rule, whether these circumstances are country-specific, relate to a certain period of time, or result from a general economic situation affecting some or all borrowing countries.

The articles do not define such circumstances, and provide the bank with latitude to determine when such circumstances are present. Adjustment loans, which do not indicate the specific uses to which their proceeds are to be put, are justified on the basis of the “special circumstances” provision.

The current bank policy requires that adjustment loan proceeds be deposited into a deposit account of the borrower in its central bank and not be used for ineligible purposes listed in the loan agreement (the standard negative list).

The bank does not routinely require an audit of the deposits account, but it reserves the right to do so. Given the “fungibility” of resources, the implementation of the policy focuses more on the borrower’s overall use of foreign exchange and budget resources than on its specific use of the bank funds.

In practice, the bank normally transfers loan proceeds in foreign exchange to a correspondent bank of the borrower’s central bank, and the central bank in turn credits an amount equal to the loan proceeds to a deposit account of the government in the central bank.

But the new Operational Policy (OP) will reflect that the negative list (and the right to request for an audit) applies to the account into which the bank deposits the loan proceeds. This account would be subject to central bank oversight arrangements, which are typically subject to the IMF’s safeguards assessment.

The new OP would recognise that the bank’s country assistance programme, including development support policy lending, supports the country’s efforts to reduce poverty. Each operation would articulate how the country’s policy programme it supports is expected to help reduce poverty.