Islamabad, Dec 16: The Ministry of Economic Affairs has denied claims that the World Bank (WB) canceled a loan exceeding $500 million for Pakistan, describing the report as a “misrepresentation of facts,” Business Recorder reported on Saturday.
The initial report, published on Friday, alleged that the World Bank canceled the loan due to Pakistan’s failure to meet key conditions on time. In response, the ministry clarified in a statement that the loan in question was “never approved by the WB Board or signed by the government,” and the article was released without consulting the Ministry of Energy or the Ministry of Economic Affairs.
The statement emphasized that the World Bank remains Pakistan’s largest multilateral development partner, with 53 active projects valued at $15.33 billion. Since 1950, the WB has provided Pakistan with financial assistance exceeding $46 billion. The bank supports Pakistan through various financing mechanisms, including Investment Project Financing (IPF), Programme for Results (PfR), and Development Policy Financing (DPF).
The Programme for Affordable and Clean Energy (PACE) began in 2020 as a budget support initiative. All required steps for PACE-I were completed, such as tariff adjustments with independent power producers (IPPs), approval of the National Electricity Plan, and subsidy rationalization. PACE-I, worth $400 million, was approved in June 2021 and disbursed accordingly.
The second phase, PACE-II, was never launched as the World Bank shifted its focus to investment projects, such as $1 billion funding for the Dasu hydropower project and support for power distribution and transmission reforms. The ministry clarified that there was no decision to cancel PACE-II since it was never formulated.
Furthermore, the government has pivoted from DPFs to IPFs to address critical infrastructure needs in the power sector, including increasing generation capacity, improving transmission efficiency, and reducing line losses. As such, PACE-II was never included in the budget for fiscal years 2022, 2023, or 2024 and has had no effect on Pakistan’s external financing or budgetary support from the World Bank.
