ISLAMABAD: The World Bank is all set to resume programme loan worth $500 million for Pakistan on Thursday under the Poverty Reduction and Economic Support Operation (PRESO) after a pause of almost one and a half years.
An official document exclusively available with The News comprising details of proposed PRESO reveals that Pakistan has agreed to the WB withdrawal of power subsidies, automatic fuel price adjustments, reduction in carry forward of development spending and strengthening of public debt management as well as expanding targeted subsidy to 40 million or 25 per cent population living below the poverty line.
The WB had suspended its programme loan for Pakistan during last fiscal year 2007-08 when Musharraf-Aziz government was unable to control political upheaval after March 9, 2007 and took crucial decisions on the economic front.
However, the document states the PRESO proposed the government to introduce an automatic fuel price adjustment mechanism, which is likely to provide benefits to consumers during the current period of low crude prices.
Interestingly, the WB assessment observes electricity tariff increases are unlikely to have any direct adverse impact on poor people. It further states fortunately, the recent decline in international commodity prices makes reduction in domestic food and fuel prices more likely than increases, which allays the earlier mentioned concerns. The proposed PRESO action on fuel is expected to benefit all households.
The WB will provide Special Drawing Rights (SDR) of 321.3 million (equivalent to $500 million) on standard IDA terms with a 35-year maturity and 10-year grace period.
The WB executive board is scheduled to take up the issue of $500 million loan in shape of single tranche policy development credit under PRESO for Pakistan on Thursday when it will meet in Washington. http://www.forexpk.com/finance/5251
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