ISLAMABAD: A joint panel of Economic Affairs Division (EAD) and World Bank (WB) has directed Federal Board of Revenue (FBR) to coordinate with the Provincial Governments to ensure timely achievement of targets relating to GST and expedite the implementation of IPF part of the project to ensure timely utilization of the available funds under Pakistan Raises Revenue (PRR) project, well informed sources told Business Recorder.
At a recent meeting on World Bank projects held in EAD it was reported that around $111 million disbursement (overdue $55.3 million + due in CFY $55.8 million) under Pakistan Raises Revenue project would be achieved subject to quick implementation by the FBR as World Bank estimates disbursement of around $ 75.45 million is achievable during CFY.
In response to a query, the Project Director shared that coordination with Provincial Governments is ongoing to achieve the GST-related targets under PRR that are also linked with the RISE-II and DPF. Monthly meetings are also being organized under the co-chairmanship of Chairman FBR and Country Director WB to help expedite the project’s implementation. Disbursements of around $41.568 million was under process at WB level and the 2nd disbursement up to US $34 million would be possibly secured by June 2023.
The Senior Joint Secretary (WB) MoEA stated that the FBR intends to restructure the project with one year extension. In the restructuring FBR has proposed diverting $ l0 million financing from results-based component towards Investment Project Finance (IPF) component.
He further elaborated that out of total financing of $400 million, $320 million is allocated towards results-based component as budgetary support and $80 million is available for FBR under IPF component as operational cost.
It was noted that in spite of the lapse of considerable time since launch of this project in June 2019, FBR could only utilize $4-5 million under IPF component. He further shared that considering the implementation lag and clear approved allocation of funds between results-based and IPF parts of the project, EAD does not support shifting of $ l0 million from results-based component to IPF component as funding allocation to results-based component is only meant for budgetary support.
He, however, opined that request regarding one year extension can be considered subject to speedy implementation of the project by FBR.
The meeting decided that FBR will coordinate with the Provincial Governments to ensure timely achievement of DLRs relating to CST and expedite the implementation of IPF part of the project to ensure timely utilization of the available funds.
Financial Inclusion Project: The project has not disbursed any funds since July 2021. A $33.1 million disbursement was made in June 2021 to finance an SME credit guarantee facility and these funds remain unutilized in spite of MoEA’s organizing a number of meetings and subsequent reminders the decision regarding establishment of the guarantee facility and allocation of rupee cover to utilize the funds disbursed in FY 2021 has not been made so far.
In order to ensure the disbursed funds could be utilized, the World Bank restructured the projected in December 2022 with time extension till June 30, 2023.
It was observed that if funds are not deployed soon, the disbursed amount of $ 33.1 million will have to be refunded to the World Bank immediately after closure of project. Similarly, the revision of PC-1 for reallocation of $ 33.1 million to LoC and repurposing of funds initially kept for CDNS and their allocation to SBP is also pending.
Secretary MoEA took serious note of this lapse and desired the Finance Division to take immediate measures for revision of PC-l to ensure diverting $ $9.2 towards LoC and time extension of the program, revise the LoC operational Manual and ensure allocation of rupee cover for timely utilization of disbursed amount to avoid its possible refund.
The meeting decided that Finance Division and SBP must ensure:(i) rupee cover for the $ 33.1 million is made at the earliest; (ii) immediate revision of PC-1 of the project and early finalization of LoC operational manual including revision and/ or additional agreement for transfer of $ 9.2 million towards.
Copyright Business Recorder, 2023