Caretaker Finance Minister Dr Shamshad Akhtar met with the Country Director World Bank for Pakistan Najy Benhassine and his team on Monday to discuss, review, and finalize the financing for two World Bank-funded operations in Pakistan.
The discussions focused on additional financing of $250 million for an ongoing World Bank-funded program “Crisis-Resilient Social Protection Program (CRISP)”. 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 “Resilient and Accessible Microfinance (RAM) Program” worth $175 million to help enhance access to microcredit and support the resilience of the microfinance sector and its borrowers was also under discussion.
Considering the importance of interventions planned under the CRISP program, the minister gave the go-ahead signal to engage the World Bank for additional financing of $250 million for the program in principle.
Another meeting is expected next week to formalize the program contours. The minister also asked to invite the State Bank of Pakistan and the Securities and Exchange Commission of Pakistan to the next meeting to finalize the program modalities.
The World Bank team apprised the minister about the broad contours of the RAM program, its funding volume, and its 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 i.e. (a) Capital, (b) Liquidity, and; (c) Climate Shocks. The proposed program will help not only overcome the constraints of the microfinance sector but also ensure a more resilient, inclusive, and growing microfinance sector in Pakistan.
The issue of public debt also came under discussion during the meeting. The meeting was told that 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 asked for 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 the IFC team.
