WB recommits $50mn to BISP safety net project

ASMA RAZAQ & ZAHEER ABBASI

ISLAMABAD: The World Bank has cancelled the second tranche of $50 million of the $200 million ‘Safety Net Development Policy Credit’ project approved in 2009 at the request of the government of Pakistan and recommitted this amount to additional financing for the scale up of social safety net project being implemented by the BISP, a spokesperson of the World Bank revealed exclusively to Business Recorder.

The new $ 150 million project was approved by the World Bank Board of Executive Directors on March 6, 2012 and the Project Agreements was signed on March 26, 2012. The amount is yet to be disbursed.  The World Bank had initiated a project under concessional funding titled ‘Safety Net Development Policy Credit’ in September, 2009 for BISP for $ 200 million. The total financial disbursements were to be made in two tranches: a) $150 million already disbursed; and b) $ 50 million. The revised closing date of the project was June 30, 2011.

The main objective of the project was to support inclusive growth through the development and implementation of a fiscally sustainable, efficiently targeted, and well-administered national safety net system in Pakistan.

According to the information available on World Bank’s website, the first tranche under the project was released on August 2009 as all the conditions were met including policy decision on improving BISP, the establishment of BISP as an autonomous statutory safety net authority to implement safety net programs and removal of the BISP beneficiaries if they do not qualify under the new targeting system.  The World Bank website adds that the second tranche of $ 50million that was expected to be disbursed on June, 2011 was kept on hold by the Bank ‘due to the Bank’s inability to provide a positive assessment of Pakistan’s macroeconomic outlook’.

The multilaterals like the World Bank and the Asian Development Bank (ADB) have already stopped program lending to Pakistan due to the failure of the country in getting the Letter of Comfort (LoC) from the International Monetary Fund (IMF) followed by the non-implementation of macroeconomic measures promised by the government to the Fund. The overall macroeconomic outlook of Pakistan seems to be deteriorating as the IMF has forecast the GDP growth of 3.4 percent while the government is more optimistic albeit less realistic at 4.2 percent. The Fund forecast a fiscal deficit and savings of 6.7 percent and 11.4 percent of the GDP respectively compared to 4.7 percent and 13.7 percent estimated by the government.