ISLAMABAD: The Pakistan Development Fund of $1.5 billion given by Saudi Arabia has still not been put into operation owing to bureaucratic hitches and inability to find an equity partner. The generous Saudi contribution is still unutilised after almost 30 months since its set up in early 2014. Finance Minister Ishaq Dar holds the chairmanship of the Pakistan Development Fund Limited (PDFL) while Finance Secretary Dr Waqar Masood is the interim CEO of the company set up to channel the funds. But apart from these, there is not even a full-time chief executive officer (CEO) appointed yet.
This gift from Saudi Arabia to Pakistan in 2014 was given to help Islamabad in its time of economic distress. No singular purpose of the assistance was cited by the government, instead it was stashed away the money in the PDFL, with the announcement that the firm would act as an independent development finance institution (DFI) and operate on commercial basis.
So far, the PDFL has existed only on paper and the government has contracted commercial loans for financing megaprojects over the past two years instead of using this fund. The finance minister has chaired a couple of PDFL meetings with the only conclusion that the government has every intention to use these funds for financing development projects but some procedural formalities have yet to be completed.
According to a finance ministry handout, Dar had invited the Asian Development Bank (ADB) to join the PDF as an equity partner in June this year. Earlier this month, the ADB had also sent a mission to Pakistan to review the possibility of becoming an equity partner in the PDFL.
Sources informed that the ADB delegation’s initial observations termed it riskier to become an equity partner, but it was willing to provide loans for the PDF on sovereign guarantees. The ADB also offered its technical expertise in the development of a commercial business plan with strategies and timeliness to run the PDFL, said the sources.
ADB Pakistan director Werner Liepach had said, “The ADB was willing to provide financing for the PDF but the form of financing has yet to be decided and the ADB discussions with the government, but the specific form of investment has yet to be determined as further due diligence is required.”
Meanwhile the officials said that the government had also engaged the International Finance Corporation (IFC) of the World Bank and the Export-Import Bank of China to become equity partners in the company. The IFC delegation is also expected to visit Pakistan this week to review the possibility of investing in the PDFL.
However, the reason for the government’s decision to seek interest of the international lending agencies remains unknown, especially considering that the amount had remained unused for the past two and a half years.
This assistance from Saudi Arabia was the key factor distinguishing PDFL and Infrastructure Project Development Facility (IPDF), another body working under the finance ministry. The stated purposes of the IPDF and the PDFL were the same, which only adds to the questions as to why the funds were not put into IPDF. A senior finance official has said that the company would soon start financing the projects and the remaining issues would also be resolved.
