Days after IMF grant, World Bank signs fresh loan agreements worth USD 1.336 billion with Pakistan

ISLAMABAD: The World Bank has signed agreements with Pakistan to provide USD 1.336 billion worth of assistance to boost the cash-strapped country's foreign exchange reserves and help support social sector programmes.

A total of six project agreements, worth USD 1.336 billion in loans, including a USD 128-million grant, were signed on Friday to support the government's initiatives in social protection, disaster and climate risk management, improving infrastructure for resilience, agriculture, food security, human capital development and governance sectors, the Dawn newspaper reported.

Secretary of Ministry of Economic Affairs Noor Ahmad, signed the financing agreements on behalf of the government of Pakistan, while representatives of the provincial governments of Sindh, Khyber Pakhtunkhwa and Balochistan signed their respective agreements online.

Najy Benhassine, Country Director of the World Bank, signed the agreements on behalf of his organisation. Minister for Economic Affairs Khusro Bakhtyar also attended the ceremony.

The newspaper reported that the first USD 600 million loan agreement pertained to the Crisis-Resilient Social Protection Programme (CRISP) to support the development of a more adaptive social protection system that will contribute to future crisis-resilience among poor and vulnerable households in the country.

The loan was signed by the board of executive directors of the bank, a day earlier under its International Development Association (IDA) programme. "Amidst the COVID-19 pandemic, millions of families across Pakistan face economic hardship, particularly those working in the informal sector, who have no savings or are not covered by existing social safety net programmes," said Benhassine.

The CRISP will facilitate the gradual expansion of Ehsaas social protection programmes to better reach informal workers through an innovative, hybrid approach that blends social assistance with promotion of increased savings that informal workers, particularly women, can depend on in the event of economic shocks.

It will provide a platform through which the government can rapidly respond to support the most affected households during an economic crisis. Earlier in the week, the International Monetary Fund (IMF) agreed to release the next tranche of USD 500 million loan for Pakistan after approving four pending reviews of the country's economic progress.

For the first time in 68 years, Pakistan's economy contracted in the outgoing fiscal year with a negative 0.38 per cent due to the adverse impact of the COVID-19 pandemic coupled with the already weak financial situation before the pandemic hit the country.