Daily Times

The Ministry of Economic Affairs has refuted a report claiming that the World Bank (WB) cancelled an over $500 million loan for Pakistan, saying the report “misrepresented facts”, Business Recorder learnt on Saturday.

A news report on Friday claimed that the World Bank had cancelled an over $500 million budget support loan to Pakistan after “Islamabad could not timely implement some major conditions”.

However, the ministry in a statement rejected the report, saying, “The news item misrepresents facts regarding Pakistan’s financial engagement with the World Bank and its impact on the country’s development programmes”.

The said loan was “never approved by the WB Board or signed by the government” and the news piece was published “without seeking perspective of the Ministry of Energy and the Ministry of Economic Affairs”, the ministry statement read.

“The World Bank remains Pakistan’s largest multilateral development partner, with an active portfolio of 53 projects worth $15.33 billion. Since 1950, the WB has provided Pakistan with over $46 billion in financial assistance.

The World Bank supports Pakistan through various financing instruments, including Investment Project Financing (IPF), Programme for Results (PfR), and Development Policy Financing (DPF),” it added.

The WB’s Programme for Affordable and Clean Energy (PACE) was initiated in 2020 as a budget support programme, and all prior actions required under PACE-I were completed successfully, including tariff revisions with independent power producers (IPPs), approval of the National Electricity Plan, and subsidy rationalisation. PACE-I, worth $400 million, was approved by the WB Board in June 2021 and disbursed accordingly, according to the ministry.

“The second phase, PACE-II, was never initiated, as the focus of WB support shifted to investment projects, including the $1 billion financing for the Dasu hydropower dam and support for power distribution and transmission reforms.

“There was no decision to cancel PACE-II, as it was never prepared in the first place. Therefore, the claims made in the article are misleading and misrepresent the facts, particularly regarding the ongoing and successful reforms in the energy sector supported by the World Bank,” the statement further said.

However, it added, the government of Pakistan recently shifted its focus from DPFs to IPFs, driven by urgent infrastructure needs in the power sector.

“These include improving generative capacity, enhancing transmission efficiency, and minimising line losses. As a result, the PACE-II programme was never part of the budget estimates for FY 22, 23, or 24 and has had no impact on the country’s external financing requirements or budgetary support from the World Bank,” the ministry said.