ISLAMABAD, Dec 5: The World Bank has approved a $238 million loan to Pakistan to support its poverty reduction programme, a bank announcement said.

According to a World Bank press release, the interest-free $238 million credit for Pakistan Poverty Alleviation Fund (PPAF) Project II is from the International Development Association (IDA), the World Bank’s concessionary lending arm, with a 35-year maturity, a 10-year grace period, and a 0.75 per cent service charge.

The PPAF Project II, the second of its kind, will bring benefits to a further 5 million poor and disadvantaged people.

The money will support microcredit, infrastructure, social and skill enhancement programmes. Women training programmes will be especially targeted for this support as well as poor people in the rural and drought-prone areas.

The project supports the PPAF, an autonomous institution created in 1999 with funding from the World Bank and the government of Pakistan.

“By focusing on microcredit, education, health, community infrastructure and skill development, the PPAF provides an integrated approach to address the many facets of poverty,” said Qazi Azmat Isa, the World Bank task leader for the project.

“This approach works in reducing vulnerability, especially among women. And because it is implemented through well-managed NGOs with good track records, it is also a powerful recognition of the role NGOs play in the delivery of resources and services to the poor.”

In Pakistan, lack of access to credit and basic infrastructure are often to blame for the persistence of poverty, said Mr Isa. In the past four years, PPAF has partnered with 38 organizations in 79 districts of the country, extending microcredit loans to more than 275 thousand borrowers, of which 45 per cent are women. Repayments right up the chain are at 100 per cent.

In infrastructure, 3,414 projects, from well building to small road paving, have been completed. Most importantly, ongoing maintenance is being fully managed by the communities.

According to two separate third-party evaluation exercises of the first bank-supported project, households borrowing from PPAF are better off today than they would have been had they not borrowed.

On average, family incomes and consumption have increased, personal and business assets have improved as has housing. The social status of borrowers in their communities, especially women borrowers, has grown.