Opposition of IMF, World Bank: Plan to have direct credit lines from banks, FIs shelved

ISLAMABAD: The Finance Division has reportedly shelved its plan to have direct credit lines from Banks/ Financial Institutions after opposition from International Monetary Fund (IMF) and World Bank, sources close to Secretary Finance told Business Recorder.

Sharing the details, Finance Division (Debt Management Office) on August 23, 2023 requested PPRA to place the matter before the PPRA Board for revocation of PPRA Board’s earlier decision of February 20, 2023.

Secretary Finance/ Chairman PPRA, Board Imdadullah Bosal briefed the Board that a summary was initiated for the Cabinet on July 21, 2023 for approval of the following proposals: (i) Cabinet may revisit/ revoke its decision on February 22, 2023 in line with the commitment of the GoP with IMF; and (ii) Cabinet may direct Public Procurement Regulatory Authority to rescind the exemption provided under Rule 14 of PPRA Rules 2004 to Finance Division from the applicability of Rule 12 enabling Finance Division to have direct credit lines from Banks/ Financial Institutions.

Banks and FIs: MoF to do away with direct credit lines

He further informed the Board that the Cabinet approved both proposals of July 23, 2023, adding that since this is one of the structural benchmarks; hence, in the light of Cabinet decision, the Finance Division requested PPRA to place the matter before the Board for revocation of its earlier decision dated February 20, 2023.

MD (PPRA), Maqbool Gondal informed the Board that earlier, Finance Division on February 09, 2023 requested PPRA to allow exemption from Rule 12 of PP Rules, 2004, so that Finance Division may be able to have direct credit lines from banks/ financial institutions to meet financial requirements of the country.

The request of Finance Division was placed before the PPRA Board in its 68th meeting held on February 20, 2023. The Board decided to allow exemption under Rule 14 of PPRA Rules 2004 to Finance Division from the applicability of Rule 12 of Public Procurement Rules, 2004 enabling Finance Division to have direct credit lines from banks/ financial institutions to meet financial requirements of the country provided that such exemption will remain valid for a period of one year“.

MD (PPRA) apprised the Board that decision of the PPRA Board was conveyed to Finance Division on February 21, 2023. However, in view of the Federal Cabinet decision of July 23, 2023 Finance Division has requested for revocation of PPRA Board’s earlier decision of February 20, 2023.

During the discussion, one of the Board members inquired the reasons from the Finance Division for revocation of the exemption. In response, another Board member stated that the earlier exemption accorded by the PPRA Board was not acceded to by the external stakeholders such as IMF, the World Bank, etc., for seeking the bids directly from the Banks/ Financial Institutions for direct credit lines.

The matter was placed before the Federal Cabinet where the Federal Cabinet decided to consider the recommendations of the external stakeholders to review the decision of accorded exemption; hence, it seems in the fitness of things that PPRA Board may recommend revocation of earlier exemption.

After a detailed discussion, Board decided to revoke exemption granted to Finance Division for a period of one year under Rule 14 of Public Procurement Ruler, 2004 from the applicability of Rule 12 of said rules for seeking the bids directly from Banks.

Copyright Business Recorder, 2023