Tag Archives: World Bank

Low-Income Housing Finance Project on Cards 

on 06/04/2018

        Islamabad approaches World Bank for $150 m credit 

The federal government is planning to start a housing finance project for low-income Pakistanis with US$150 million credit from World Bank. The government has approached the bank for a soft loan of US$150 m for ‘Housing Finance Program’ which will help people get affordable financing for constructing their homes, officials said.

The loan will be provided in two tranches of US$145 m and US$5 m and will cost the cheapest interest rate. The bank will provide the loan at 1.25 percent interest rate. Pakistan’s central bank will provide it to the commercial banks which will utilize it for mortgage purposes.

At present, a federal program for housing is underway thus the government has to utilize it under that program as a foreign exchange component (FEC) or will make new PC-I for the purpose. It will require approvals from the CDWP and ECNEC.

Pakistan is facing a shortage of around 9 million housing units. An annual demand stands at 0.6 million units which is being added to burgeoning total. With a considerable future demand, Pakistan requires a huge investment in this sector. It requires to construct 0.5 million houses annually for 18 years.  For such a purpose, a sum of US$2.5 billion is required to meet the fresh demand of 0.6 million units besides an amount of US$2 billion per year to address the backlog.

85 pc foreign investors forsee growth

on 30/01/2018

The Perception and Investment Survey of the Overseas Investors Chamber of Commerce and Industry (OICCI) has found that near about three quarters foreign investors foresee continued growth in their businesses and plan to make further investments in Pakistan.

In percentage nearly 66pc respondents of the survey were found indicating plans for making new investments in business and human capital. Around 85pc of the respondents expect increased sales and 68pc anticipate a rise in their profits in coming years.

Yet another healthy sign was that the issue of energy shortages, which was listed as the second biggest challenge in the last three surveys, has dropped out of the list of top five challenges. However, law and order still remains in the top five list but it dropped two points down and at present is the biggest challenge on number three instead being the number one.

The results of the survey have been presented to Prime Minister Shahid Khaqan Abbasi. OICCI President Khalid Mansoor told the prime minister that the overall results of the survey reflect improved and positive sentiments of the members of the OICCI.

OICCI members also highlighted key concerns impeding fast growth in foreign direct investment (FDI), including a negative perception of the country against positive realities. They pointed out that a poor ranking on World Bank`s Ease of Doing Business Index and tax related matters, like the year-on-year continuation of three to four percent super tax, long delays in the settlement of refunds and a growing number of inter provincial coordination issues, can be managed by ensuring good governance.

WB tribunal upholds TCC claim

on 17/07/2017

 Pakistan may face $11.5 b penality

An arbitration tribunal of  World Bank has ruled in favor of Tethyan Copper Company Pvt Ltd (TCC) in Reko Diq gold mine project case. As a consequence, Pakistan may face a penalty of $11.5 billion for not awarding the project to TCC. World Bank’s International Center for Settlement of Investment Disputes (ICSID) had earlier rejected Pakistan government’s application to dismiss TCC’s claims on grounds of corruption and malpractices by the latter. Both the federal and provincial governments submitted applications before ICSID and International Criminal Court (ICC) in The Hague during 2015-16, seeking admittance of new evidence showing TCC’s corrupt practices in Reko Diq affairs for illegal and undue gains. The move turned futile as the court ruled against Pakistan government for unlawful denial of the mining lease for Reko Diq to TCC which is a joint venture of Chile’s Antofagasta and Canada’s Barrick Gold Corporation. The TCC had initially filled the claim in 2012. Later in 2017, the company filed for compensatory damages amounting to $9.1 billion based on fair market value of its investments in the project till November 15, 2011. In addition, it also filed a claim of $2.3 billion as pre-award compound interest. Now, the government has to submit its reply to TCC’s damages claims. It merits mentioning that the PPP government had made an unsuccessful attempt to settle the dispute with TCC and, had also warned the Balochistan government of not paying pay damages in case of any adverse ruling from international tribunals. TCC held 75% shares while Balochistan had a 25% stake in the project. The company claims to have invested over $500 million in exploration, scoping and feasibility studies of the project. The total investment in the project was projected as $5 billion over a period of five years. TCC and Balochistan reached a deadlock in 2009 because of two major issues. One that Balochistan refused to take financial responsibility against its 25 percent stake. Two, the TCC was not in favor of the involvement of a Chinese company. A letter written by Pakistan’s Ambassador to Chile Burhanul Islam to then Petroleum Minister Naveed Qamar in September 2009 had advised against involving Metallurgical Corporation of China in the same mining site. In a feasibility report submitted to the Balochistan government, TCC projected a turnover of over $60 billion for the gold and copper project over a span of 56 years. This projection was based on a price of $2.2 per pound of copper and $925 per ounce of gold, in the year 2009. The mine has estimated reserves of 11.65 million tons of copper and 21.18 million ounces of gold.

Pakistan to set up Infrastructure Bank

on 08/05/2017

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. 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. The government is consulting with the World Bank to introduce solar energy, as a new electricity generation alternative, at a lowest cost in Pakistan. 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.

World Bank to fund Peshawar-Kabul highway

on 02/05/2017

World Bank (WB) has agreed in principle to finance the mega project of building a highway between Peshawar and Kabul. This was disclosed by Finance Minister Ishaq Dar after his meeting with Vice President of WB for South Asian Region Ms. Annette Dixon in Washington in April. Discussing the current economic situation in Pakistan, Dar said WB had been a great partner in the country’s development. Talking to the Pakistani delegation, Ms Dixon said WB would like to work more closely with Pakistan. She appreciated the initiatives taken by the Pakistani government for putting economy on the path of sustainable economic development. During the course of discussion, Dar proposed to WB to finance a major project of constructing a highway from Peshawar to Kabul for improving regional connectivity. The World Bank has agreed in principle to finance the project. Dar also proposed that WB might consider leading a consortium to finance Diamer Bhasha Project. Dar said the government took concrete measures to bring structural changes for the sustainable economic development in the country. The minister said the government had established a Micro Finance Company to extend such facilities to the poorer segments of the society. He informed WB team that Pakistan was one of the leading countries for ensuring financial development in the country and for this purpose a strategy had been devised which was being implemented thoroughly. He said 10 more laws were being enacted which aimed at further facilitating the private sector. In response to a question about policy reforms in Pakistan, he remarked that the parliament had so far passed 24 laws to create conducive and enabling environment for growth and private sector investment. In yet another communication, WB Group President Jim Yong Kim has said that the multilateral lender does not plan to change its stance on financing alternative energy projects and mitigating the effects of climate change. Asked about the Trump administration’s scepticism about climate change at a news conference, Kim said WB would continue to work with governments and the private sector to boost financing for alternative energy, especially in China, India, Indonesia, the Philippines, Pakistan and Vietnam. “The science of climate change didn’t change with any particular election, and I don’t see that it will,” Kim said. “We have to be an evidence-based organisation,” he added.