Pakistan to become eligible for IBRD loans

WASHINGTON: Pakistan is soon expected to become eligible for loans from the International Bank for Reconstruction and Development (IBRD), which would enable it to undertake major projects, says a statement issued by the Pakistan Embassy after a meeting with senior bank officials. The embassy reported that at a meeting with Finance Minister Ishaq Dar, the World Bank’s vice president for the South Asian region, Philippe Le Houerou, acknowledged Pakistan’s eligibility for IBRD loans and “directed his team to work closely with Islamabad in selecting major projects that could be financed under IBRD.” IBRD loans are publicly guaranteed debt extended by the World Bank Group at market rates. Low-income countries usually do not qualify for IBRD loans unless they are creditworthy. India and Indonesia are examples of creditworthy low-income, blend-countries which were eligible for a blend of financial assistance from both IBRD and the International Development Association, a World Bank fund for poor countries. Pakistan, however, was pushed out of this category and moved to that of low-income countries that are eligible to receive low or no interest loans and grants from IDA. A post on the World Bank’s official website explains why Pakistan cannot yet access IBRD lending and underlines the country’s deteriorating macroeconomic indicators. IBRD loans are non-concessional and not extended to those member countries that have a Gross National Income of less than $1205 in 2014. Blend-countries, however, are eligible for concessional IDA assistance; typically with little interest rate and payable over 25 to 40 years with a 5 to 10-year grace period as well as non-concessional IBRD. Pakistan is no longer a blend country but only an IDA eligible country while India is a blend country eligible for IDA because of its low per capita income. The embassy’s statement, however, indicates that Pakistan will soon re-enter the bled-country status, qualifying for both IDA assistance and IBRD loans. At a separate meeting with US businessmen, the finance minister said that Pakistan will facilitate investments into the energy sector to meet an acute energy shortage. Speaking at a discussion hosted by the Business Council of International Understanding, he said that Prime Minister Nawaz Sharif-led government had taken the lingering issue of energy shortages head on, and was working to overcome energy shortfall through a focused approach. The council includes members from more than 150 world-leading companies and is dedicated to promoting dialogue and action between the business and government communities. Dar encouraged investors to investment in the energy sector to bridge the 4,000MW gap between production and supply for domestic users as well as the industry