The World Bank (WB) has, reportedly, refused to provide fresh lending of $1 billion for reconstruction of flood-hit areas, and emphasised the need for the government to reprioritise funds already committed for ongoing projects, sources in Finance Ministry exclusively told Business Recorder.
Minister of State for Finance Hina Rabbani Khar had recently announced at a press conference that Pakistan had rejected the offers of Asian Development Bank and World Bank to extend loans by diverting funds already committed for ongoing projects. She had said that the government would accept fresh loans only for reconstruction of flood hit areas.
"We have received response from World Bank that it is not willing to provide fresh lending, while ADB has not yet responded," sources said. "Multilateral donors are not ready to extend loans over their approved envelope of lending," sources added.
Some Friends of Democratic Pakistan (FoDP) member countries, in line with the World Bank ultimatum, have informed the government that all humanitarian assistance, for internally displaced persons as well as for flood relief activities, is part and parcel of the pledges that were made in Tokyo in April 2009.
The objective of the Tokyo pledges was to support Pakistan's efforts towards counter-terrorism and economic reform. In line with these objectives there has been increasing criticism from several FoDP members including the US and Germany that Pakistan must begin to tax its elite. According to official figures, the FoDP disbursed $1.4333 billion to Pakistan in the last one year and six months, against Tokyo pledges of $5.3 billion.
It is expected that the Government of Pakistan would raise the issue of additional assistance, as opposed to diverting already committed assistance for humanitarian efforts, during the meeting of Pakistan Development Forum (PDF), scheduled to be held on November 14-15, 2010 in Islamabad.
All development partners will attend the meeting, and country heads of multilateral donors are also expected to attend the PDF meeting. ADB had committed $2 billion (on non-concessional terms) and WB $1 billion (on concessional terms) by diverting funds for ongoing projects towards reconstruction of flood affected areas, which Pakistan had rejected.
Pakistan requires $6 billion to $9 billion for rebuilding the flood-torn areas and had requested the World Bank and ADB to bridge the financing gap by providing $3 billion in cash. This correspondent tried to contact the spokesperson of World Bank, but received no response till the filing of this report.
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