ISLAMABAD : The World Bank has committed up to $1.3 billion for Pakistan in the 2009/10 fiscal year and violence in the country will not deter it from continuing its projects, a World Bank official said. Out of new loans committed for this fiscal year, $300 million had been disbursed, Yusupha Crookes, World Bank country director for Pakistan, said in an interview.
"If everything gets delivered, which we very much expect will be done, we will make commitments of around $1.2 billion to $1.3 billion for the current fiscal year," Crookes said on Friday. A commitment is an undertaking to provide a loan but not all loans get disbursed at the same pace.
Crookes said Pakistan was on the right track after taking some tough decisions, such as eliminating subsidies, to put itself in a much more robust position. Increased insecurity had not affected bank projects, he said. "Last fiscal year was the most challenging year that Pakistan has ever encountered up to that point," Crookes said. "That year, we basically committed, delivered more assistance to Pakistan than the bank has ever done in its history."
"We have been able to continue doing business driven only by whether or not there was a need in Pakistan," Crookes said. Pakistan is dependent on external flows to keep its fiscal deficit within a target of 4.9 percent for 2009/10. Allies promised $5.7 billion over two years in April last year but only $300 million has come in. Another $1 billion is expected by the end of the 2009/10 fiscal year.
The fiscal deficit for the first quarter ending on September 30 was 1.5 percent of gross domestic product (GDP), a slippage of 0.2 percent from the target. Finance Minister Shaukat Tarin said last week the fiscal deficit might be 5.3 percent of GDP this fiscal year.
The main concern for the World Bank was whether or not Pakistan had the capacity to generate revenue to meet expenditure, Crookes said. "The fundamental issue in Pakistan is basically whether or not the state is generating enough revenues to be able to support the kind of social expenditure that it has contracted with its citizens to deliver," he said.
Pakistan's tax as a percentage of gross domestic product is about 9 percent, which is one of the lowest in the world. The World Bank has this year worked on a major social safety net programme and reforms to support higher education. Crookes said projects scheduled up to June 30 were a poverty reduction programme, several power projects and building Karachi port's capacity to handle traffic.
Copyright Reuters, 2010
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