Almost 90pc of Geneva pledges are project loans, Dar reveals

Published January 11, 2023
Prime Minister Shehbaz Sharif, along with members of the cabinet, addresses a press conference in Islamabad on Wednesday. — PID
Prime Minister Shehbaz Sharif, along with members of the cabinet, addresses a press conference in Islamabad on Wednesday. — PID

Finance Minister Ishaq Dar revealed on Wednesday that almost 90 per cent of pledges made by the international community at a donors’ conference in Geneva for flood-hit Pakistan were project loans that will be rolled out over the next three years.

Earlier this week, the international community committed to give Pakistan a huge sum exceeding $10bn to help it recover from last year’s devastating floods. Officials from some 40 countries as well as private donors and international financial institutions had gathered for the meeting, co-hosted by Islamabad and United Nations.

During a press conference today alongside Prime Minister Shehbaz Sharif and other members of the federal cabinet, Dar said that $8.7bn of the pledges were loans. He did not reveal what the terms of these loans were. However, the prime minister said “we expect the terms to be lenient”.

Dar highlighted that project loan financing had already crossed $8bn, which included commitments from the Islamic Development Bank, the Asian Development Bank, the Asian Infrastructure Investment Bank, and the World Bank.

“I am not incorporating the pledge made by the Saudi Development Bank on purpose here because it is not clear whether their announcement of $1bn pertains to programme lending or project loan,” Dar said.

Responding to a question on how soon he expects these pledges to turn into actual inflows, the premier said that depended on “us”.

“The faster we can design and create feasibilities and impress them [donors], the faster these pledges will materialise.”

These pledges will not solve Pakistan’s immediate dollar liquidity crisis as is being touted by some government officials, according to a Dawn editorial.

With the SBP reserves already down to around $4.5bn or equivalent to less than four weeks of imports after recent loan payments to two UAE-based banks, the country direly needs an immediate cash injection. That — and probably the flood recovery pledges from multilateral lenders — is unlikely to materialise unless Islamabad mends its tense relationship with the International Monetary Fund (IMF).

During the presser, the finance minister also talked about a meeting he had with the IMF team on the sidelines of the Geneva moot, revealing that discussions over the already delayed ninth review for the release of $1.2 billion revolved around the government’s ability to meet the revenue targets previously determined for the ongoing fiscal year after the Federal Board of Revenue fell short in December.

This gap in revenue collection was a result of a high court invalidating the super tax imposed by the government in June last year, according to the finance minister. He said that his team informed the IMF that Pakistan could recover the revenue shortfall in a staggered manner after the Supreme Court ruled on the super tax. “We are not changing the fiscal budget target and we will achieve it,” he asserted.

However, the IMF still wanted the government to take fiscal measures and cut back some subsidies, Dar added. “We have identified some fiscal measures but there will be no burden on the common man. They will be very targeted and categorical,” he assured.

Dar asked naysayers to stop spreading panic over “default” rumours, saying such elements must consider national interest above everything.

‘Every penny of pledges to be used for prosperity of flood-hit people’

At the outset of the briefing on Wednesday, PM Shehbaz vowed that the government would utilise “every penny” of the pledges made by the international community for the prosperity and rehabilitation of flood-hit people, which according to him would be materialised in the next three years.

He asserted that the conference proved to be a “success” for Pakistan.

“Be it bilateral or multinational donation, a sum of $9.7 billion is the total amount [that was pledged] and the Islamic Development Bank (ADB) held a major share of $4.2bn of the total financial commitments,” he said.

Giving a breakdown of the amount pledged at the conference, the prime minister said Saudi Arabia committed $1 billion followed by China $100m, Qatar $25m, Canada $18.6m, Denmark $3.8m, European Union €87m, France €380m, Germany €84m, Italy €23m and Azerbaijan $2m.

The premier said the amount pledged by “friendly countries” showed respect for Pakistan, adding the countries would never have committed the amount had there been reservations over financial irregularities.

“Those who hatched propaganda against the government have gotten the answer,” he said in an indirect reference to opponents of the coalition government.

He also heaped praise on Foreign Minister Bilawal Bhutto Zardari for his efforts in meeting foreign dignitaries and raising “the case of Pakistan effectively”.

The PM maintained that the world leaders trusted the incumbent coalition government, adding “it is now upon us to utilise the amount on infrastructural development and for the development of other important sectors.”

He also hailed Saudi Crown Prince Mohammed Bin Salman for exploring the increase of the deposit amount in the State of Bank of Pakistan (SBP) to $5bn.

He said the government would keep striving to help flood-hit people until they were relocated to their homes.

“It is now our turn to put in our blood and sweat in taking forward the mission for the rehabilitation of our people.”

Talking about tackling climate challenges, PM Shehbaz said the government was aware of the globally changing circumstances as reconstruction process will have to be robust and resilient through modern technology.

“Only time will tell to what extent we will be able to complete the target [of rehabilitation], but we will spare no effort,” he vowed.

He told journalists that every penny will be spent in a very transparent manner, while “a third party audit will be conducted” to ensure transparency of the process.

PM’s foreign policy has been successful: Bilawal

In his address, Foreign Minister Bilawal Bhutto Zardari termed the PM’s foreign policy as “successful”, saying the government achieved “two targets with a single shot”.

“When I say we achieved two targets simultaneously, it means we also dispelled a myth that Pakistan is isolated.”

Bilawal said the requirement of $16bn [for flood recovery] in times of Covid, as well as the crisis triggered by the Ukraine-Russia conflict, was “no joke”.

The minister regretted that the condition of flood-hit people was dismal at the moment as scores of them were living under the open sky without basic necessities. “We are striving harder to restore their lives to pre-flood time at the earliest,” he added.

He said it was now time to put in concerted efforts and help flood victims to steer them out of the crisis.

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