Pakistan will receive over $3 billion in the current fiscal year on concessional terms for a period of 40 years at a 1 percent interest rate.
Secretary Planning Commission Zafar Ali Shah said in an interview with a media official in Islamabad that Pakistan will start receiving payments from international lenders beginning next month. The international community, led by multilateral agencies, had made pledges of approximately $9.7 billion, compared to Pakistan’s expected target of roughly $8.1 billion, he stated.
The Secretary Planning Commission said the money will be available under mutual agreements with all lenders, while a counter will also be established at the Ministry of Planning, Development and Special Initiatives for the funds received via multilateral and mutual investors. Moreover, the federal government will establish a technical committee to coordinate payments with the new funds.
He recalled that the World Bank (WB) had pledged $2 billion, the Islamic Development Bank (IsDB) $4.2 billion, Asian Development Bank (ADB) $1.5 billion, and the Asian Infrastructure Investment Bank (AIIB) $1.1 billion. He explained that the pledged funds would be available to Pakistan in three years, in accordance with project implementation, but that significant funds would start coming in during the current fiscal year and help revitalize the forex reserves.
He also claimed that Pakistan had already spent $1.5 billion of its resources on flood recovery and relief. He stated that the total need assessment confirmed by multilateral lending agencies was $16.3 billion after accounting for losses and damages totaling $30.1 billion.
Zafar Ali Shah said the government has so far spent $1.5 billion on post-flood recovery and has decided to spend an additional $8 billion over the next three years.
In response to a query, the secretary said details of the $4.2 billion funding from the Jeddah-based IsDB were still being reviewed because the announcement was a “pleasant surprise” and much higher than previously discussed. He further commented that lenders such as the World Bank, ADB, and AIIB pledged approximately $3 billion more funds than their normal annual financing pipelines.
On another note, the official said the government is working to improve the country’s growth rate this year and devising strategies to manage funds as soon as they start coming in.