Ministry of Economic Affairs strongly rejects the misleading claims made in a news article published by the Express Tribune on December 13, 2024.

“The news item misrepresents facts regarding Pakistan’s financial engagement with the World Bank (WB) and its impact on the country’s development programs. The headline of this news story referring to cancelation of a loan which was never approved by the WB Board or signed by the Government, is utterly misleading and false. This news piece has been published without seeking perspective of the Ministry of Energy and the Ministry of Economic Affairs,” the ministry said in a statement.

“The World Bank remains Pakistan’s largest multilateral development partner, with an active portfolio of 53 projects worth US$ 15.33 billion. Since 1950, the WB has provided Pakistan with over US$ 46 billion in financial assistance. The World Bank supports Pakistan through various financing instruments, including Investment Project Financing (IPF), Program for Results (PfR), and Development Policy Financing (DPF), it said.

Since 2009, the WB has provided DPF support to Pakistan for 12 programs worth over US$ 5 billion in critical sectors such as Revenue and Finance, Energy, Social Safety Nets, and Human Development. Among the key DPFs signed in recent years are the Securing Human Investments to Foster Transformation–Development Policy Financing (SHIFT-I & II), which amounts to US$ 900 million to strengthen health, education, and civil registration systems; Resilient Institutions for Sustainable Economy (RISE-I & II) worth US$ 850 million to support fiscal management and competitiveness reforms; and the Program for Affordable and Clean Energy (PACE) worth US$ 400 million to reduce circular debt, decarbonize the energy mix, and improve distribution efficiency.

The World Bank’s Program for Affordable and Clean Energy (PACE) was initiated in 2020 as a budget support program, and all prior actions required under PACE-I were completed successfully, including tariff revisions with IPPs, approval of the National Electricity Plan, and subsidy rationalization. PACE-I, worth $400 million, was approved by the WB Board in June 2021 and disbursed accordingly. The second phase, PACE-II, was never initiated, as the focus of WB support shifted to investment projects, including the $1 billion financing for the Dasu hydropower dam and support for power distribution and transmission reforms. There was no decision to cancel PACE-II, as it was never prepared in the first place. Therefore, the claims made in the article are misleading and misrepresent the facts, particularly regarding the ongoing and successful reforms in the energy sector supported by the World Bank.

However, the Government of Pakistan has recently shifted its focus from DPFs to IPFs, driven by urgent infrastructure needs in the Power Sector. These include i/mproving generative capacity, enhancing transmission efficiency, and minimizing line losses. As a result, the PACE-II program was never part of the budget estimates for FY 22, 23, or 24 and has had no impact on the country’s external financing requirements or budgetary support from the World Bank.

In the past few months, the World Bank’s support to Pakistan has primarily been directed toward IPFs. The Government of Pakistan has successfully secured record disbursements of over US$ 2 billion in the last two consecutive years, with a target to achieve similar disbursements in the current fiscal year. The Ministry of Economic Affairs is also negotiating projects worth approximately US$ 1.5 billion during this fiscal year.

“Ministry of Economic Affairs views the news story in the Express Tribune as a misrepresentation intended to cast doubt on Pakistan’s successful engagement with the International Monetary Fund (IMF) and its positive impact on macroeconomic indicators. It also seeks to create unnecessary concerns about Pakistan’s excellent partnership with the World Bank.

The Government of Pakistan reaffirms its strong and productive partnership with the World Bank and remains committed to furthering the country’s development through continued collaboration on key infrastructure and energy reforms,“ said the statement.