Broken promises result in $2b undelivered loans

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Broken promises result in $2b undelivered loans

By Shahbaz Rana
July 03, 2010


ISLAMABAD: Pakistan received over $2 billion less than target inflows due to poor planning of economic managers, according to a senior official in the Ministry for Finance. He said the gap had to be filled by borrowing from the central bank which resulted in inflation.

The ministry official said that Asian Development Bank (ADB) and World Bank (WB) have both refused to release loans worth $655 million each, as the government has not met conditions that were agreed upon with the donor agencies.

“The government was not realistic at the time of making promises with the agencies which has resulted in less-than-expected inflows,” he said. The World Bank had asked Pakistan to reform its tax system and power sector.

While the official claimed that Washington-based WB fell short of its commitment by 45 per cent, the donor agency’s spokesperson said that the $780 million disbursed in 2009-10 was approximately 90 per cent of the targeted disbursements for the last financial year.

The official also said that a $300 million loan for the Poverty Reduction Support Credit programme could not be finalised during the last fiscal year.

Meanwhile, World Bank has approved a $146 million soft loan for the second phase of the Pakistan Barrages Improvement Project to rehabilitate and modernise the Jinnah Barrage. The repayment period for the loan is 40 years on less than one per cent interest rate.

World Bank Acting Country Director for Pakistan, John Wall said “Improvements in basic infrastructure including water supplies are critical to improving human development outcomes.”

The Punjab Barrages Improvement Phase II Project aims to strengthen and modernise Jinnah Barrage and to enable reliable and uninterrupted supply of water for over 2.1 million acres of farmland. It will provide 600,000 families with irrigation and water for domestic use.

Jinnah Barrage is one of the highest priority barrages in the Indus system as it provides a bridge over the Indus River to link roads between Khyber Pakthunkhwa and Punjab.

The World Bank supports more than 48 operations in irrigation, drainage, water resources development and power sectors in Pakistan. The agriculture system is wholly dependent on irrigation.

Broken promises result in $2b undelivered loans – The Express Tribune