Pakistan holds talks with World Bank on $425m funding for dual projects

January 22, 2024 (MLN): To discuss, review, and finalize the financing for two World Bank-funded operations worth $424 million in Pakistan, the caretaker Finance Minister, Dr. Shamshad Akhtar, engaged in a meeting today with the Country Director of the World Bank for Pakistan, Najy Binhassine, and his team.

The World Bank-funded program titled “Crisis-Resilient Social Protection Program (CRISP)”, being implemented by the Benazir Income Support Program (BISP) requires additional financing of $250m.

The program aims to support the development of a more adaptive social protection system that will contribute to any future crisis resilience among poor and vulnerable households.

The second project is the “Resilient and Accessible Microfinance (RAM) Program” worth $175m to help enhance the access to microcredit and support the resilience of the microfinance sector and its borrowers.

Considering the importance of interventions planned under the CRISP program, the Finance Minister gave a go-ahead signal to engage the World Bank for additional financing of $250m for the program in principle.

She, however, desired to convene another meeting next week to formalize the program contours. She also desired to invite the State Bank of Pakistan and the Security and Exchange Commission of Pakistan to the next meeting to finalize the program modalities.

The World Bank team apprised the Finance Minister about the broad contours of the RAM program, its funding volume, and its objectives.  

The meeting was informed that the microfinance sector of Pakistan has shown resilience and continued to grow despite multiple exogenous shocks.  

However, sector growth and resilience have been shaken by deep and continued shocks and are currently being impeded by 3-cross-cutting constraints; Capital, Liquidity and Climate Shocks.  

The proposed program will help not only overcome the constraints of the microfinance sector but also ensure a more resilient, inclusive, and growing microfinance sector in Pakistan.

However, the issue of public debt also came under discussion during the meeting.  Raising loans for extending support to Microfinance Banks and Microfinance Institutions will increase the volume of public debt.  

It was proposed that such interventions would best be supported by mobilizing local resources instead of foreign loans. 

Based on the detailed presentation and meeting discussion, Finance Minister desired further refinement of background work for the program and data set to ensure accuracy.  

She asked the World Bank team to continue working on the program in collaboration with the IFC team.  

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