World Bank Board to decide on $350 million RISE-II project
for Pakistan in December
The World Bank’s Board of Executive Directors is set to
convene next month to deliberate on the approval of the 'Second Resilient
Institutions for Sustainable Economy project' (RISE-II) for Pakistan, totaling
$350 million.
The project's developmental objectives aim at enhancing the
policy and institutional framework to improve fiscal management and fostering
growth and competitiveness through improved regulatory frameworks.
The operation is designed to
- Enhance fiscal management by improving fiscal policy coordination
- Enhancing debt transparency and management
- Broadening the tax base and reducing distortions in tax policy
- Improving the financial viability of the power sector through resolving circular debt
- Addressing unsustainable power subsidies
- Support reforms to improve the regulatory framework by:
- Harmonizing the General Sales Tax (GST)
- Improving financial sector transparency and deepening
- Increasing the use of digital payments
- Reducing the anti-export bias of the National Tariff Policy
The proposed RISE-II operation will be backed by an
International Development Association (IDA) credit of $200 million and an IDA
Shorter Maturity Loan of $150 million. The reforms supported under the
operation fall under two pillars: enhancing the policy and institutional
framework to improve fiscal management and improving the regulatory framework
to foster growth and competitiveness.
World
Bank concerned over obstacles in privatization of Pakistan’s State Owned
Entities (SOEs)
This operation is crucial in helping Pakistan meet
significant external financing needs following a series of external and
domestic shocks. The reforms supported align with the World Bank's strategic
priorities in Pakistan and the government's reform program.
The RISE Development Policy Operations (DPOs) series, initially
envisioned as three operations, sees this second operation delayed by 24 months
after completing Prior Actions (PAs) and establishing a sustainable
macroeconomic framework.
The first RISE DPO, RISE-I, approved by the WB Board in June
2020, supported an ambitious government reform program during the global
COVID-19 crisis. Despite significant progress, delays in reining in
accommodative fiscal and monetary policies led to buffer erosion, prompting the
government to seek WB support under a revived RISE program.
Pakistan,
World Bank discuss disbursement of $2 b during current financial year
A new IMF-SBA was approved on July 12, 2023, with the
government implementing critical stabilization measures. The government reached
a Staff Level Agreement with the IMF on the first review of the SBA on November
15, 2023.
Most policy and institutional reforms supported by this
operation are expected to have neutral poverty and social effects. The
operation's overall risk rating is High, but it is deemed essential for
stabilization efforts, contributing to required fiscal adjustments in the
medium term, despite exceptional downside risks.
Macroeconomic risks are acknowledged with reserve cover projected
to be below 1.5 months of imports at the end of the SBA. The project documents
revealed that poverty reduction has slowed, facing challenges such as shocks,
structural constraints, and periodic macroeconomic crises, affecting women and
girls' access to services and opportunities.
Source: Pro Pakistani