‘$300m loan moderately unsatisfactory’
March 17, 2021
ISLAMABAD: The Independent Evaluation Group (IEG) of the World Bank has declared $300 million programme loan for Pakistan under Finance for Growth as moderately unsatisfactory mainly because of political risks and macroeconomic instability.
The WB's IEG report states that the programme development objective of Pakistan Finance for Growth Development Policy Credit was to support the government's efforts "to promote an inclusive and transparent financial sector that was able to better intermediate resources including for long-term finance." The IEG in its detailed evaluation report stated that the outcome of the programme is assessed as “moderately unsatisfactory”.
The programme objective was highly relevant to the development priorities of Pakistan and highly aligned with the country partnership strategy of the Bank Group: part of a larger set of macroeconomic reforms, the operation was directed at addressing low savings and investment -- by broadening (increasing access to finance) and deepening (developing capital Political risk is substantial. Political risk could arise from (a) opposition by vested groups to institutional reforms, for example, to governance reform in the SOE-dominated insurance industry; (b) the absence of a majority by the ruling political party in the Upper House of parliament, which could weaken political commitment to reforms that support the macroeconomic framework; and, (c) an under-delivery by the provinces on their commitments to the budget parameters, which could also weaken the macroeconomic framework.