ISLAMABAD - Finance Minister Ishaq Dar on Wednesday said that Pakistan’s foreign exchange reserves would enhance to $22.5 billion by the end of current month, setting a new record of highest ever reserves.

“The reserves will increase to $22.5 billion by the end of June, as World Bank has approved $500 million while the International Monetary Fund (IMF) will also approve $500 million for Pakistan in the next few days,” the minister said while talking to The Nation.

He further said that Pakistan and WB would formally sign the Financing Agreement today (Thursday); thereafter the WB will disburse the entire amount to Pakistan in a single tranche.

He said that $1 billion inflow from the WB and IMF combined would take the reserves to around $22.5 billion, as currently these stood at $21.42 billion wherein State Bank of Pakistan’s reserves were $16.5 billion and commercial banks had $4.9 billion reserves.

“The IMF’s Executive Board meeting would be held on June 27 to approve $500 million for Pakistan, under the extended fund facility,” he said, and added, “Pakistan has completed 11 reviews, under the 3-year Extended Fund Facility (EFF) programme, for an amount of $6.4 billion, which was approved in September 2013. The 12th and last review under the programme is tentatively planned for August or September this year.”

Meanwhile, the WB’s Board of Executive Directors, in its meeting, held at Washington, approved an amount of $500 million for Pakistan for its Competitiveness and Growth Development Policy Financing (CGDPF).

The Bank also approved IBRD Policy based guarantee of $420 to support origination of commercial financing up to $1 billion.

The amount to be released by the Bank is to assist Pakistan in carrying out the critical economic structural reforms, initiated by the present government, to accelerate and reinvigorate inclusive growth in Pakistan.

The credit has two broad development objectives and pillars; improving the business environment and enhancing fiscal management through improving revenue management and making public spending more pro-poor.

The CGDPF will support the Government of Pakistan’s efforts to encourage economic growth and investment for reducing poverty and building shared prosperity.

“The Government of Pakistan has made significant progress by stabilising the economy, initiating reforms for revenue mobilisation and drawing in the private sector for spurring growth,” says Illango Patchamuthu, the World Bank Country Director for Pakistan.

“It is now stepping up efforts through deeper reforms and an accelerated pace of implementation. This will improve competitiveness of the economy, which in turn will create more and better jobs, lifting millions out of poverty,” he added.

The CGDPF will provide $920 million in budget support to improve the business environment and strengthen fiscal management. The financing combines a credit of $500 million and a World Bank guarantee of $420 million.

“The operation will support reforms that contribute towards accelerating growth and fostering an inclusive growth pattern,” says Enrique Blanco Armas, Task Team Leader of the Project.

“The reforms will improve the business environment and contribute to the development of the financial sector and state-owned enterprises. The operation also supports efforts for improved fiscal management through increased revenues, better coordination of debt management and making public spending more pro-poor,” he added.

The WB’s guarantee is an innovative instrument that will support Pakistan’s access to international markets to meet its budgetary financing needs.

The Bank will guarantee up to $420 million of financing to be raised by Pakistan, improving the terms under which the Government of Pakistan accesses international financing, and freeing domestic resources for private sector investment.

It has also been learnt that Sindh Resilience Project (SRP) of $100, aimed at reducing flood and drought risks in selected areas of the province and strengthening the province’s capacity to manage natural disasters, is also to be funded by the WB in future.

“The project would contribute to reduction in vulnerability and risk in Sindh through a combination of physical works, strengthening fiscal resilience and institutional development activities,” says Haris Khan, Task Team Leader of the project.

An estimated 5 million people, including both urban and rural populations, will be directly protected from frequent river flooding events.

In addition, an estimated 65,000 people, who are currently exposed to drought and food insecurity, will also be directly benefitting from the construction of small dams for rain water harvesting and recharging of groundwater aquifers.

The CGDPF’s Development Policy Credit will be financed by the International Development Association (IDA), the World Bank’s grant and low interest arm.

The credit will be on standard IDA terms, with a maturity of 25 years, including a grace period of 5 years.  The SRP will have a maturity of 24 years, including a grace period of 5 years.