ISLAMABAD: With foreign exchange reserves targeted to cross $17 billion next month, Pakistan on Wednesday asked the World Bank and the China Development Bank (CDB) to work out synchronised financial assistance portfolios for infrastructure development in the country.

This was the crux of a meeting when World Bank’s Country Director for Pakistan Rachid Benmessaoud called on Finance Minister Ishaq Dar to convey formally on behalf of the World Bank Management that Pakistan has again become eligible for availing $2 billion funding under the International Bank for Reconstruction and Development (IBRD) funding in four years (2015-19).

Pakistan has become eligible for concessionary IBRD facility under the Country Partnership Strategy (CPS) after a lapse of three years following stability in foreign exchange reserve situation as it cross $15bn, enough to cover 2.5 weeks of imports. The facility was suspended in March 2012 because Pakistan could not fulfill the conditions regarding macroeconomic stability.

Informed sources said the WB delegation told the finance minister about the CDB’s desire to be part of the IBRD funding facility at comparatively cheaper rates provided the WB finances and verifies feasibility studies for various infrastructure projects in Pakistan.

Chinese Development Bank offers to be part of the IBRD funding facility at cheaper rates

Normally, the CDB provides loans at about 4.5-5 per cent, but based on bankable feasibility studies by the IBRD, the Chinese bank is reported to have offered finance projects at lower interest rates.

The sources said the finance minister though encouraged by cooperation between the two development banks clarified that they should come up with their separate priority portfolios so as the funding programme by one institution should add on to other instead of being part of the same portfolio. “We should not end up with only $2bn infrastructure development funding put together by two institutions”, was the message the finance minister conveyed to the World Bank.

The World Bank official also discussed important matters regarding future development roadmap of the country.

An official statement quoted Mr Benmessoud as appreciating the “continuous improvement in the macroeconomic indicators including significant growth in FBR collection as well as GDP, low inflation, cut in budget deficit and improving foreign exchange reserves position, which has played a pivotal role in restoration of this facility”.

The finance minister recalled that after making repayments of foreign loans obtained by the previous governments the SBP reserves dipped to $2.82bn in Feb 2014, but corrective measures taken by the government brought the economy back on track and reserves touched $16 billion (SBP holding crossed $11bn) as of Feb 11, 2015.

Dar told the World Bank’s official that with expected inflows from the United States on account of Coalition Support Fund (CSF) and some other sources the country’s foreign reserves are likely to touch $17bn next month.

The IBRD facility will be utilised for priority infrastructure projects, said the finance minister.

Published in Dawn February 26th , 2015

On a mobile phone? Get the Dawn Mobile App: Apple Store | Google Play