In response to a report he published The Express Tribune and Monitored by This writer On Friday, the Ministry of Economic Affairs issued a statement.
According to the ministry, the report published by the media indicated the cancellation of a loan that was not approved by the World Bank’s Board of Directors or signed by the government, and therefore the report is false.
The report was published without taking the viewpoint of the Ministry of Energy and the Ministry of Economic Affairs. CAccording to the ministry, the initial PACE-I project, worth $400 million, was approved by the World Bank’s Board of Directors in June 2021 and disbursed accordingly.
The second phase, PACE-II, never began, as the focus of World Bank support shifted to investment projects, including $1 billion in financing for the Dassault Hydropower Dam and support for power distribution and transmission reforms, the ministry statement said.
No decision was made to cancel PACE-II, because it was never set up in the first place, and therefore the claims in the report were misleading and misrepresented the facts, especially regarding the ongoing successful energy sector reforms supported by the World Bank. .
The World Bank’s Program for Clean and Affordable Energy (PACE) was launched in 2020 as a budget support program, and all prior actions required under PACE-I have been successfully completed, including review of tariffs with IPPs, approval of the National Electricity Plan, and subsidies. rationalization.
In the past few months, the World Bank’s support to Pakistan has been primarily directed towards investment funds. “The Government of Pakistan has secured record disbursements of over $2 billion in the last two consecutive years, with the aim of achieving similar disbursements in the current fiscal year.”
“The Government of Pakistan has recently shifted its focus from development policy loans to investment project loans, driven by pressing infrastructure needs in the energy sector. This includes improving generating capacity, enhancing transmission efficiency, and reducing line losses,” the ministry said.
“As a result, PACE-II was never part of the budget estimates for FY22, FY23 or FY24 and had no impact on the country’s external financing requirements or budget support from the World Bank,” the statement added.
The original report he published platform He stated that due to Islamabad’s failure to meet key reform conditions, the World Bank canceled $500 million in financing. One of these key conditions was the renegotiation of power purchase agreements under the China-Pakistan Economic Corridor (CPEC).
He stated that this funding was crucial to securing budget support. The government’s renegotiation efforts with independent power producers, including plants linked to the China-Pakistan Economic Corridor, have resulted in limited savings, while structural reforms such as private sector participation in power distribution have not been achieved.
She also said the World Bank had confirmed a shift in its strategy, focusing instead on direct financing of projects, such as the Dassault hydropower project, rather than policy-based lending. More importantly, the report said the “cancellation” could impact Pakistan’s financial plans, including its goal of securing loans worth $2 billion during the current fiscal year. Besides the lack of any new loans to support the budget, filling the $2.5 billion external financing gap identified by the International Monetary Fund remains uncertain.
Explaining this, the ministry statement said, “The World Bank remains Pakistan’s largest multilateral development partner, with an active portfolio of 53 projects worth $15.33 billion.” The statement added: “Since 1950, the World Bank has provided Pakistan with financial assistance worth more than $46 billion.”
The ministry also said that the World Bank is supporting Pakistan through various financing instruments, including Investment Project Finance (IPF), Program for Results (PfR), and Development Policy Financing (DPF).
The statement continued that since 2009, the World Bank has provided development policy loan support to Pakistan for 12 programs worth more than $5 billion in critical sectors such as revenue and finance, energy, social safety nets, and human development.
Among the major DPLs signed in recent years were the Securing Human Investments to Strengthen Transformative Development Policy Financing (SHIFT-I & II), worth $900 million to strengthen health, education and civil registration systems; Resilient Enterprises for a Sustainable Economy (RISE-I & II) $850 million to support financial management and competitiveness reforms; It added $400 million in Affordable and Clean Energy (PACE) programs to reduce circular debt, decarbonize the energy mix, and improve distribution efficiency.
The Ministry of Economic Affairs said it is also negotiating projects worth about $1.5 billion during this fiscal year.
The ministry considered the media report a distortion aimed at questioning Pakistan’s successful engagement with the International Monetary Fund and its positive impact on macroeconomic indicators. “It also seeks to create unnecessary concerns about Pakistan’s excellent partnership with the World Bank,” the statement said.