Devastating floods: Pakistan gets mere $1.48bn out of $10.9bn pledged in Geneva

ISLAMABAD: Pakistan has so far received approximately $1.48 billion in the form of project and commodity financing from multilateral and bilateral creditors out of total Geneva pledges of $10.9 billion for reconstruction in the flood-hit areas.

However, the project financing has remained dismally slow and stood at just $780 million as of September 2023. Pakistan had undergone severe floods in the last financial year, causing colossal human and financial losses, and the donors pledged $10.9 billion in the form of loans for reconstruction efforts.

Islamabad has also secured around $700 million in the form of oil and commodity financing. However, it is a fact that the disbursement of project loans so far has remained dismally slow, so all executing agencies at the federal and provincial levels will have to accelerate the disbursement of flood-affected projects in their respective areas.

“The caretaker prime minister has also taken notice of this slow disbursement of committed pledges as the project loan acceleration depends upon the executing agencies’ ability to implement the projects on a fast-track basis,” a top official of the government confided to The News here on Tuesday.

The Islamic Development Bank (IsDB) had committed $3.6 billion on account of commodity financing, out of which $1.1 billion was planned to be disbursed on an annual basis over a year. Out of $3.6 billion, there was a planned disbursement of $300 million, which was underway during the current fiscal year. However, the remaining $3.3 billion was still problematic because it was syndicated financing, which the IsDB planned to secure from other commercial banks. So far, there are indications that its interest rate might exceed and fall into a range of over 10 percent.

However, the oil-importing giants argued before the government that if they secured local funding, it would be on a much higher side, keeping in view the higher interest rates in the domestic market.

The Kingdom of Saudi Arabia has so far disbursed $600 million as an oil facility out of total financing committed for commodities and oil financing. The government has heavily relied on the disbursements of project loans from the World Bank and Asian Development Bank. From the World Bank loans, there are projects going to be executed in Sindh and Balochistan for the construction of housing and agriculture sectors.

The premier is expected to chair an important meeting to review progress on donor-funded projects for flood-affected areas after his return from abroad, as one of such important meetings got postponed last week before his recent departure to the USA.

The implementation of flood-affected area projects needs acceleration in order to materialise maximum disbursements from the pledged loans, but without improving bottlenecks at execution levels, this wish will remain just a pipe dream.