WB denies reports of delay in loan approval

Current account deficit falls to $0.4 billion in December, central bank says

The World Bank yesterday termed reports in some sections of the media claiming delay in approving loan for Pakistan as “unfounded” and baseless, saying that it was not delaying approval of any loan for the country.

“The press reports that refer to a World Bank decision to delay approval of potential Bank operations in Pakistan are unfounded”, Country Director of the World Bank for Pakistan Najy Benhassine said on his official Twitter handle.

Earlier, reports in a section of the media had claimed that the Washington-based lender had delayed the approval of two loans for Pakistan worth $1.1 billion until the next fiscal year for some pending steps on the country’s energy debt and tariffs. However, Behassine made it clear that all the dates for approval of loans were already scheduled.

“The tentative Board approval dates of all of our proposed operations, as well as their amounts, are indicative, and the World Bank decides on the timing for sharing project proposals for Board consideration following due process and based on the proposed projects’ readiness”, the WB Country Director added.

Meanwhile, Pakistan’s current account deficit fell to $0.4 billion in December 2022 from $1.9 billion a year earlier, the central bank said on Wednesday, as the cashstrapped government slashed imports in a bid to avert an external payments crisis.

Foreign exchange reserves held by the central bank stand at $4.3 billion — enough cover for just three weeks of imports — and the country’s International Monetary Fund (IMF) bailout programme has been stalled for months.

December’s figures mean Pakistan has brought its current account deficit for the first half of the financial year that began in July 2022 down to $3.7 billion from over $9 billion in the corresponding period in the previous financial year, the State Bank of Pakistan (SBP) said.

Pakistan has looked to curb imports to reduce external financing needs. The economy has witnessed a sharp slowdown in the face of a financial crisis, compounded by devastating floods last year that inflicted billions of dollars of damage.

Expected external financing inflows have slowed as the country struggles to implement economic reforms under the IMF programme it entered in 2019. The World Bank has also delayed the approval of two loans worth $1.1 billion.

“Machinery imports are low due to a slowdown in overall economic activities, curbs by SBP on the import of plant and machinery, higher interest rates, and uncertainty with respect to the IMF programme,” Tahir Abbas from Karachi-based brokerage firm Arif Habib Limited told Reuters.