International Loans / Grants

[ghazi52]

World Bank approves $350m in financing to support fiscal, competitive reforms in Pakistan​

Reuters | Dawn.com
December 20, 2023

The World Bank’s board of executive directors approved $350 million in financing for the Second Resilient Institutions for Sustainable Economy (RISE-II) operation in Pakistan on Tuesday.

Najy Benhassine, World Bank’s country director for Pakistan, in a statement highlighted that this project completes the initial phase of “tax, energy and business climate reforms” aimed at improving fiscal revenues and stimulating competition and investment.

RISE-II aims to strengthen fiscal management and promote competitiveness for sustained and inclusive economic growth in the country whose economy is struggling to grow, with persistently high inflation and foreign reserves running low.

“Based on the foundations laid through RISE II and parallel support by other IFIs, Pakistan has the opportunity to tackle long-standing structural distortions in its economy after the upcoming general elections,” Derek H. C. Chen, task team leader of the operation said in a statement.

“Failing to use this opportunity would risk plunging the country back into stop-and-go economic cycles,” Chen added.

The operation also aims to foster growth and competitiveness by reducing the cost of tax compliance, improving financial sector transparency, encouraging the use of digital payments and promoting exports by lowering import tariffs, the World Bank said in its statement.

At a conference last month, World Bank Regional Vice President for South Asia Martin Raiser had cautioned Pakistan against short-term measures like domestic debt restructuring and attracting one-time investment through a new civil-military initiative, without addressing the country’s big picture issues through reforms aimed at improving the larger business climate, taxation and human capital.

The “creation of a new institution is no quick fix” to bring investment without improving the taxation system, competitive market conditions and state-owned entities, he had said.

Previously, in a report, the global lender had also emphasised that fiscal reforms and sustainable growth were critical for Pakistan.

“Careful economic management and deep structural reforms will be required to ensure macroeconomic stability and growth,” it had said.

World Bank approves $350m in financing to support fiscal, competitive reforms in Pakistan

Pakistan has the opportunity to tackle long-standing structural distortions in its economy after the upcoming general elections, says project head.

www.dawn.com

 

[RescueRanger]

World Bank approves $350m in financing to support fiscal, competitive reforms in Pakistan​

Reuters | Dawn.com
December 20, 2023

The World Bank’s board of executive directors approved $350 million in financing for the Second Resilient Institutions for Sustainable Economy (RISE-II) operation in Pakistan on Tuesday.

Najy Benhassine, World Bank’s country director for Pakistan, in a statement highlighted that this project completes the initial phase of “tax, energy and business climate reforms” aimed at improving fiscal revenues and stimulating competition and investment.

RISE-II aims to strengthen fiscal management and promote competitiveness for sustained and inclusive economic growth in the country whose economy is struggling to grow, with persistently high inflation and foreign reserves running low.

“Based on the foundations laid through RISE II and parallel support by other IFIs, Pakistan has the opportunity to tackle long-standing structural distortions in its economy after the upcoming general elections,” Derek H. C. Chen, task team leader of the operation said in a statement.

“Failing to use this opportunity would risk plunging the country back into stop-and-go economic cycles,” Chen added.

The operation also aims to foster growth and competitiveness by reducing the cost of tax compliance, improving financial sector transparency, encouraging the use of digital payments and promoting exports by lowering import tariffs, the World Bank said in its statement.

At a conference last month, World Bank Regional Vice President for South Asia Martin Raiser had cautioned Pakistan against short-term measures like domestic debt restructuring and attracting one-time investment through a new civil-military initiative, without addressing the country’s big picture issues through reforms aimed at improving the larger business climate, taxation and human capital.

The “creation of a new institution is no quick fix” to bring investment without improving the taxation system, competitive market conditions and state-owned entities, he had said.

Previously, in a report, the global lender had also emphasised that fiscal reforms and sustainable growth were critical for Pakistan.

“Careful economic management and deep structural reforms will be required to ensure macroeconomic stability and growth,” it had said.

World Bank approves $350m in financing to support fiscal, competitive reforms in Pakistan

Pakistan has the opportunity to tackle long-standing structural distortions in its economy after the upcoming general elections, says project head.

www.dawn.com

Queue more taxes.

 

[Mr X]

We only have incoming. The outgoing is off, they should know

How much the debt is for Pakistan now? The last time I checked it was going above 110 billion dollars

 

[ghazi52]

Pakistan, ADB ink $1.2b loan deals​

Open choked financing pipelines, revitalise financial landscape

Shahbaz Rana
December 20, 2023

Pakistan and the Asian Development Bank (ADB) have signed six loan agreements worth $1.2 billion, with one-third of it to be disbursed as budget financing, reopening choked financing pipelines after reaching a deal with the International Monetary Fund (IMF).

The loan agreements were signed by the Economic Affairs Division (EAD) and the local office of the ADB on Friday. A spokesperson of the EAD confirmed to The Express Tribune that $1.2 billion in loan agreements with the ADB have been inked.

Of the $1.2 billion, ADB will provide $400 million in budget support under two different deals, said the officials.

Budget financing has remained suspended for a longer time due to strained relations between Pakistan and the IMF, impacting lending programmes of two other multilateral creditors. After reaching a staff-level agreement last month, the IMF has now set January 11th as the date for approval of the $700 million tranche by its board.

design: mohsin alam

The ADB is expected to disburse a $300 million loan under the so-called Domestic Resource Mobilisation programme this week. Another $100 million in budget support is to be disbursed under the Women Financial Inclusion programme this week subject to fulfilling some procedural requirements. The budget support lending would help push the central bank’s reserves close to $7.5 billion.

Official inflows have remained low during the first five months of this fiscal year, standing only at $6.4 billion or a quarter of the annual financing needs. The rollovers of the $3 billion debt by Saudi Arabia are over and above these disbursements.

The ADB has approved these loans during the past few days, but the agreements were signed three days ago. The Manila-based lending agency signed these agreements only after declaring Pakistan’s debt sustainable – a position that is contrary to what Finance Minister Dr Shamshad Akhtar has taken. The minister said a few days ago that Pakistan’s public debt has become unsustainable.

The ADB stated that Pakistan’s public and external debt is projected to remain sustainable in the baseline scenario underpinned by the firm implementation of prudent macroeconomic policies over the medium term.

“The debt sustainability analysis also confirmed Pakistan’s debt sustainability under the impacts of multiple crises from 2020 to 2023 and after factoring in the additional borrowings,” it added.

It further stated in the project documents that large gross financing needs pose a high risk to medium-term debt sustainability, but decisive implementation of reform policies is expected to ensure continued access to adequate bilateral and multilateral financing.

The Manila-based lending agency said that this fiscal year’s budget targets an underlying primary surplus of 0.4% of GDP, a consolidation of 1.4% of GDP during the year.

The government’s FY2024 budget consolidation is based on strong revenue effort and containing energy subsidies.

The ADB also signed a $250 million agreement for the strengthening of the power transmission sector project, $102 million for the Punjab Workforce Readiness project, $83 million for the Khyber-Pakhtunkhwa Food Security project, and $250 million for the Sindh Secondary Education project.

The ADB documents stated that the current IMF programme was “critical for Pakistan to address multifaceted fiscal consolidation challenges that will help achieve fiscal and debt sustainability, unlock large external financing needs during the political transition, and provide a newly elected government with sufficient flexibility to shape the medium-term reform strategy.”

The ADB underlined that during the current fiscal year, the budget deficit is estimated to be 7.5% of GDP, and the government plans to finance the deficit through the issuance of treasury bills, bonds, and official development assistance.

Pakistan has taken a $300 million loan to strengthen the tax administration and increase collection – a task that does not need any foreign borrowing.

The $300 million loan will have a 15-year term, including a grace period of three years; an interest rate determined in accordance with ADB’s Flexible Loan Product; a commitment charge of 0.15% per year; and such other terms and conditions set forth in the loan agreement, according to the ADB documents.

The Flexible Loan Product is a market-based floating rate lending instrument, and at current market prices, it would cost Pakistan over 6% interest – a cost that is almost three times higher than the concessional lending by the World Bank and the ADB.

The 15-year tenor of the ADB loan is also relatively shorter than its previous financing to Pakistan.

Published in The Express Tribune, December 20th, 2023.

Pakistan, ADB ink $1.2b loan deals | The Express Tribune

Open choked financing pipelines, revitalise financial landscape

tribune.com.pk

 

[VCheng]

We only have incoming. The outgoing is off, they should know

How much the debt is for Pakistan now? The last time I checked it was going above 110 billion dollars

Hasn't Pakistan sent off more than a billion dollars to Afghanistan as loans and aid?

 

[ghazi52]

AIIB okays $250m for sustainable growth​

Amin Ahmed
December 29, 2023

ISLAMABAD: With the approval of $250 million by the Asian Infrastructure Investment Bank, for the Second Resilient Institutions for Sustainable Economy (RISE-II) development policy financing, the government is now in full gear to implement critical policy reforms to accelerate economic recovery and build the foundations for sustainable growth.

Last week, the World Bank had approved $350m for the second phase of the RISE project, which was followed by the Beijing-based AIIB to approve $250m for the $500m project.

RISE-II is supported under the Covid-19 Crisis Recovery Facility of AIIB and co-financed with the World Bank as a development policy financing (DPF) under the WB’s DPF Policy to further key institutional and policy reforms.

AIIB co-financed RISE-I with the World Bank in 2020, which was first in the proposed programmatic series to assist the Pakistan government strengthen its policies for improved macroeconomic management and business competitiveness in the medium term.

The objectives of the second programmatic operation are to strengthen the country’s macroeconomic management and support a more sustained and inclusive growth by mitigating the compounded socioeconomic effects of the Covid-19 pandemic and other exogenous and domestic shocks.

Objectives and goals

The newly-approved operation will provide external financing to help the government implement critical policy reforms to accelerate economic recovery.

Specifically, RISE-II seeks to further address key institutional and policy constraints for effective fiscal management and private sector investments to induce economic growth and reduce poverty by enhancing the policy and institutional framework to improve fiscal management; and improving the regulatory framework to foster growth and competitiveness.

Reforms supported by the programmatic series are relevant to current economic challenges and have already contributed to important outcomes of strengthening institutions for fiscal and debt management, broadening tax base and reducing distortions, eliminating trade barriers, and rationalising power sector subsidies.

An AIIB document says the programme results will be achieved under two reform pillars. The first pillar focuses on reforms that will enhance macro-economic stability and fiscal management by improving fiscal policy coordination; enhancing debt management and debt transparency; broadening tax base and reducing distortions in tax policy; reducing the stock of circular debt in the power sector; and addressing unsustainable and inequitable power subsidies.

Measures under the second pillar will improve the regulatory framework to foster growth and competitiveness by harmonisation of the general sales tax; financial sector transparency and deepening; increasing the use of digital payments; and reducing anti-export bias of the National Tariff Policy.

The World Bank’s DPF policy requires the bank to determine whether the specific policies supported by a development policy loan are likely to have significant social and poverty consequences, especially on the poor and vulnerable groups or to cause significant impacts on the country’s environment, forests, and other natural resources.

The World Bank has determined that the policy and institutional reforms supported by this operation are unlikely to have significant adverse poverty and social impacts and some prior actions are expected to have positive impacts on gender inclusion and poverty reduction.

Most policy reforms supported by this operation are expected to have positive environmental impacts by increasing the budgetary allocations for environmental management and contributing directly to climate change mitigation and adaptation.

Published in Dawn, December 29th, 2023

AIIB okays $250m for sustainable growth

The objectives of AIIB's second programmatic operation are to strengthen the country’s macroeconomic management.

www.dawn.com