Govt to set up Pakistan Infrastructure Bank with access to $1 billion

ISLAMABAD: The government will set up Pakistan Infrastructure Bank with a paid-up capital of one billion dollars to finance private investors in development projects, said Finance Minister Ishaq Dar.

“Both the International Monetary Fund (IMF) and government will hold 20 percent stake each in the proposed Bank, while international organisations, such as International Finance Corporation, will have the remaining shares,” Dar told a press briefing with the Pakistani media towards the end of his current visit to Washington DC. He gave a detailed round up on the plenary sessions with the IMF and World Bank during the briefing. He was on a five-day visit to U.S. to attend the spring meetings of IMF and the World Bank.

Minister Dar further said the government would soon be launching Pakistan Development Funds. The shares worth Rs100 billion of the Fund would be offered to Pakistani diaspora in order to effectively channelise their valuable remittances. Later on, the Fund’s shares would be enlisted on the Pakistan Stock Exchange. “After success of sukuk bonds, Pakistan Development Fund would be another attractive investment for overseas Pakistanis,” he added.

Finance minister said the government is consulting with the World Bank to introduce solar energy, as a new electricity generation alternative, at a lowest cost in Pakistan. He further said Pakistan has made an impressive headway in financial and digital inclusion. There is a positive sentiment about the tremendous economic rebound over the last four years.

The minister said the country was at the verge of bankruptcy in 2014, “and today Pakistan is likely to achieve approximately five percent growth rate during the current financial year.”  “Both IMF and World Bank are on the same page with the government in these projections,” he added. 

The World Bank remained bullish on Pakistan’s growth prospects for the next three years, revising its earlier projection notches up on large cross-border infrastructure investment, reforms and restoration of investor confidence. 

The bank, in its flagship report, forecast the GDP growth in the South Asia’s second biggest economy at 5.2 percent for 2017. It added that the growth is expected to accelerate from 5.5 percent in 2018 to 5.8 percent in 2019, “reflecting improvements in agriculture, infrastructure, energy and external demand.”

IMF, in its world economic outlook, forecast the country’s growth at 5 percent in 2017 and 5.2 percent in 2018, supported by ramped-up infrastructure investment.

The Asian Development Bank is also bullish over the country’s economic prospects this fiscal year, upgrading its growth forecast to 5.2 percent on improved energy supply and security and rising investment.

The minister said the global credit rating agencies have upgraded the rating of Pakistan from ‘negative’ to ‘stable’ and from stable to ‘positive’ over the years to an extent that the country is likely to be included in G-20 countries by 2030.

Minister Dar further said the country has successfully completed the IMF program first time ever and is now considered as a case study of economic turnaround due to prudent fiscal and monetary policies and macro-structural reforms.

Towards the end of the briefing, Dar emphasised that Pakistan has now emerged as a lucrative investment option for international investors. He urged the U.S. multinational giants to consider Pakistan for establishing labor-intensive facilities in the South Asian region.