Govt refutes claim regarding World Bank’s loan cancelation

ISLAMABAD: The Ministry of Economic Affairs refutes the misleading news made by a local publication, claiming that the World Bank announced a $500-600 million budget support loan cancellation to Pakistan due to Islamabad’s failure to implement key conditions.

The ministry’s press release confirmed that the news story referring to cancelation of a loan that was never approved by the WB Board or signed by the Government is “utterly misleading and false”.

The report argued that the canceled loan was part of the Affordable and Clean Energy program.

The World Bank initially granted Pakistan a $500 million loan but subsequently increased it to $600 million to cover the external financing gap.

The economic ministry alleged that the World Bank is Pakistan’s largest multilateral development partner, with an active portfolio of 53 projects worth US$ 15.33 billion.

“Since 1950, the WB has provided Pakistan with over US$ 46 billion in financial assistance. The World Bank supports Pakistan through various financing instruments, including Investment Project Financing (IPF), Program for Results (PfR), and Development Policy Financing (DPF),” the statement read.

The ministry confirmed that the federal government has successfully secured record disbursements of over US$ 2 billion in the last two consecutive years, with a target to achieve similar disbursements in the current fiscal year.

“The Ministry of Economic Affairs is also negotiating projects worth approximately US$ 1.5 billion during this fiscal year.”

Clearing the air about the cancelation of the World Bank’s Program for Affordable and Clean Energy (PACE), the economic affairs ministry said that the first phase of PACE, worth $400 million, was approved by the WB Board in June 2021 and disbursed accordingly.

“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,” the statement read.

The ministry termed the claims in the news articles as misleading by stating that “There was no decision to cancel PACE-II, as it was never prepared in the first place”.

“The Government of Pakistan reaffirms its strong and productive partnership with the World Bank and remains committed to furthering the country’s development through continued collaboration on key infrastructure and energy reforms,” the statement concludes.