Impact of political impasse on economy: mission in no capacity to make judgements: World Bank

The World Bank has said its mission is in no capacity to make judgements on the possible outcomes of the civil unrest and its impact on the economy of Pakistan. Sources told Business Recorder here on Friday that a WB mission visited Pakistan in August-September 2014 for preliminary discussions on a possible second Development Policy Credit (DPC-II) operation to support the government''s programme of fiscal sustainable and inclusive growth enhancing reforms.
This is the second in a proposed series of two programmatic development policy credits, structured around two development objectives (i) foster private and financial sector development, and (ii) expand social protection and revenue mobilisation. The programme development objectives are also supported by a parallel development policy credit (DPC) in the power sector. Both DPC operations are central to the support of the Bank and other development partners to the government''s reform programme in the four areas including energy, private sector development, inclusion and service delivery, as described in the 2015-19 Country Partnership Strategy.
According to the aide memoire of the WB, containing a summary of the main findings of the mission, the WB is in no capacity to make judgements of the possible outcomes of the civil unrest and its impact on the economy. It, however, feels that notwithstanding the valuable efforts made by the authorities, the steady pro-reform environment that characterised the first year of government may have to be re-assessed. Once the situation returns to normalcy, the mission will review progress in DPC-II actions (in terms of timing, content, relevance and sustainability) as originally designed. The events might also suggest the government to consider strengthening some areas of the programme, such as inclusion and governance. Therefore, the mission recommends that the design of the proposed DPC-II operation be flexible to accommodate possible adjustments to the set of reforms and to the final cut-off date. The mission took place under an extremely difficult and volatile environment due to the political unrest and demonstrations. Access to government offices was quite complicated. Five members of the World Bank team were not able to travel to Islamabad from overseas, it said.
The mission examined the progress toward a Single Tranche operation under the pre-identified initial triggers of the operation committed in the first programmatic DPC-I. The status of such triggers, as originally agreed, is examined in the matrix and the memorandum assessing their progress. The aide memoire also included a set of additional possible actions for DPC-II for consideration of Pakistani authorities. Finally, the aide memoire also sets out the tentative timeframe for processing this credit, and the proposed support that will eventually be considered by Bank senior management for Board presentation presently scheduled around the ''third Quarter, FY2014-15. As usual, the processing of the DPC-II remains contingent on the satisfactory conclusion of the Reviews of the Extended Fund Facility (EFF) program agreed with the IMF, it added.