Pakistan still faces significant governance challenges that could hamper policies to reduce poverty and spur economic growth, while the energy sector is in serious crisis, facing high cost and inefficiency that make it hard to finance investments, the World Bank said. According to the World Bank latest report Pakistan Country Program Snapshot released on Tuesday states that widespread power outages are a major problem obstructing development and Pakistans energy sector is in a serious crisis, facing high cost and inefficiency that make it hard to finance investments. Corruption and accountability challenges significantly influence Pakistans development objectives and service delivery. The countrys high perceived risks negatively affect the investment climate, while corruption undermines the quality of and access to services. For example, electricity supplies do not cover development needs, while rural services like health and education, as well as access to credit, have been undercut. The report maintained that governance challenges range from the rule of law, security and a legacy of corruption, to resource management and the effectiveness of the civil service. Addressing these is critical to the success of policies to improve service delivery, competitiveness and the vital energy sector, as well as fostering stability in the country. Another critical challenge is the resource management, particularly revenue collection and the finances of state-owned enterprises (SOEs). Tax collection levels are relatively limited both in a comparative sense, and in relation to the financing needs of development priorities. Meanwhile, SOEs actual and potential losses, as well as related flows of subsidies, are a fiscal risk. These two challenges will require the strengthening of tax administration and SOE corporate governance. According to the report, the World Banks program in Pakistan is governed by its Country Partnership Strategy (CPS). Total portfolio commitment increased over the CPS period (FY10-14), with slower disbursements. The Pakistan portfolio has 24 active investment lending operations with a total net commitment of $4.60 billion, and a total disbursement to date of $1.61 billion (and a total un-disbursed balance of $2.78 billion). In addition, the Bank manages a Multi-Donor Trust Fund (MDTF) for the conflict affected areas of about $160 million, which provides grants to KP, FATA and Balochistan. The MDTF portfolio had 11 active projects with disbursement to date of $42 million. Disbursements were $554 million in FY13, for a disbursement ratio of about 20 percent. Disbursement performance has lagged in the past couple of years, partially due to lack of quick disbursing or budget support operations in the portfolio. At the same time, disbursement linked indicator-based operations contribute a significant portion of disbursement. Pakistans overall performance towards CPS outcomes has been mixed with considerable achievements in education and social protection but less progress on transformational outcomes of increasing revenue mobilisation and improving energy efficiency. The MDTF for conflict-affected provinces has extended small operations in areas such as emergency road recovery; hospital revitalisation; rural livelihoods; and improving urban centers. About two-thirds of Bank operations are implemented at the provincial level, maintained in the report. The new Pakistan CPS for FY15-19 is structured to direct the full force of Bank Group support to help the country tackle the most difficult but potentially transformational areas to reach the twin goals of poverty reduction and shared prosperity. The key prongs of the new country partnership strategy are organized around the following five areas: (1) transforming the energy sector; (2) increasing private sector participation; (3) breaking through the good enough barrier on services; (4) reaching out to the undeserved, neglected and poor; and (5) leveraging regional markets. Getting the most transformational change will also require a shift in instruments and engagement as follows: (1) increase the use of policy support operations; (2) leverage large private sector funding to complement public sector reforms; (3) increase the use of results based operations; (4) share knowledge, build capacity and facilitate dialogue; and (5) reduce fragmentation in our sub-national engagements. It further says that the new CPS for FY15-19, which is under preparation, is expected to provide International Development Association lending of about $1.2 billion per year (or $5.5 billion over the CPS period). Pakistan could also benefit from additional regional IDA allocations, particularly in trade and energy. Pakistan is an IDA/IBRD blend country. IBRD availability will depend on minimum creditworthiness criteria, characterised by reserves equal to at least three months of next years imports of goods and services, and a stable or declining government debt to GDP ratio. The IFC would also expand its efforts to bring in more private capital and will invest between $500-$700 million per year from its own sources and another $50-100 million from other investors. Altogether this amount would represent a 20 percent increase over the last CPS period. The Bank plans to help ease energy shortages through investments, including the first phase of the Dasu hydropower project and the regional CASA-1000 project, bringing central Asian power to Pakistan through Afghanistan. IFC is engaged with domestic and international sponsors to finance private power projects. For the next few years, IFC is expected to invest about $500-$700 million annually. Half will be in trade finance and the remainder focused on infrastructure, financial markets, agribusiness, manufacturing and services. Infrastructure will remain IFCs largest investment exposure in Pakistan, with a focus on low cost and renewable energy. IFC is currently engaged with local and international (Chinese and Korean) sponsors to finance mega private energy projects, aimed at adding 10,000MW of electricity in the next five years, including hydro, thermal, and renewable, as well as LNG imports. IFC is at an advanced stage of preparation with China Three Gorges to mobilise substantial equity investment for a platform company that will develop hydro, thermal, and wind power, maintained in the report.
Posted on: Wed, 06 Aug 2014 06:40:59 +0000
Trending Topics
Recently Viewed Topics
© 2015