After receiving the grant to the tune of $1.5 billion from Saudi Arabia last year, the government will now finalise a business plan to decide how to spend the money.Minister for Finance and Economic Affairs Ishaq Dar on Tuesday chaired a second meeting of the Board of Directors of Pakistan Development Fund Limited (PDFL), asking the board to finalise the plan after which another meeting will be held to filter projects to be funded.
Pakistan had received the grant in two equal tranches and booked the aid under Pakistan Development Fund (PDF). It also added contributions from the Asian Development Bank and International Finance Corporation of the World Bank, said an official of the ministry.
During the meeting, it was informed that in accordance with the directive of the Board, all requisite documents had been prepared in consultation with the Securities and Exchange Commission of Pakistan to make the PDFL functional and fully compliant with the Companies Ordinance 1984.
The documents were under submission to SECP for grant of licence as Non-Bank Financial Company. The NBFC provides banking services but cannot take deposits.
The Board of Directors also authorised the chief executive officer, who happens to be Finance Secretary Dr Waqar Masood, and the company secretary to manage, operate and draw amounts from the PDFL account to comply with the requirements of SECP, for the conduct of the company business and other administrative expenses.
The chair called upon the BOD members to fully operationalise the company for financing projects in the country. The first meeting of PDFL was held in December last year. The Fund specially focuses on providing finances for infrastructure development projects coming up on the basis of public-private partnership, said the Ministry of Finance.
Justice Mohammad Reza, Secretary Law and Justice, Secretary Planning and Development, Hasan Nawaz Tarar, Secretary Finance, Dr. Waqar Masood, Advisor Finance Division, Rana Assad Amin, Additional Secretary (IF) Abdul Akbar Sharifzada also attended the meeting.
Small farmers scheme
Meanwhile, Dar also approved Credit Guarantee Scheme focusing on small farmers who do not have any collateral to offer against loans. Farmers with land holding up to 5 acres in canal-fed and 10 acres in rain-fed areas are eligible to apply. The scheme was announced in the budget for the current financial year, it may be recalled.
The minimum loan size is Rs100,000 with a maximum tenor of one to 1.5 years. The government will share 50% of the loan default risk and it has already allocated Rs5 billion for the scheme. The scheme, which is the initiative of the Ministry of Finance, will be executed by the State Bank of Pakistan.
The meeting also reviewed the disbursement of agriculture credit in the FY 14-15. The Minister was informed that against total allocation of Rs500 billion, Rs289 billion had been disbursed by the end of February 2015 32% higher compared to the same period last year.
The Minister was also informed that commercial and micro-finance banks had gained momentum in terms of grant of agriculture credits which manifested upsurge in the agriculture sector.
The formal launching of Credit Guarantee Scheme will be carried out in a few days.
Published in The Express Tribune, March 18th, 2015.
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Grant from Saudi Arabia: Finalise plan on how to spend $1.5 billion, says Dar (The Express Tribune (Pakistan))