By Asad Cheema
ISLAMABAD: Caretaker Minister for Finance, Revenue and Economic Affairs Dr Shamshad Akhtar and Country Director World Bank (WB) for Pakistan, NajyBinhassine on Monday met to discuss, review and finalize the financing for two World Bank-funded operations in Pakistan. The operations include additional financing of US$ 250.0 million for an ongoing World Bank-funded programme titled “Crisis-Resilient Social Protection Programme (CRISP”, being implemented by Benazir Income Support Programme (BISP).
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 WB-funded operation includes Pakistan: “Resilient and Accessible Microfinance (RAM) Program” worth US$175.0 million to help enhance access to microcredit and support the resilience of the microfinance sector and its borrowers.
Considering the importance of interventions planned under the CRISP program, Dr Shamshad Akhtar gave go-ahead signal to engage the World Bank additional financing of US$250 million 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 (SBP) and Security and Exchange Commission of Pakistan (SECP) in 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 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 including Capital, Liquidity, and Climate Shocks. The proposed program will help to 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, the 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 IFC team. Finance Minister appreciated the continuous support of the World Bank to Pakistan.
