AS of April 2014, the World Bank had an active project portfolio of $4.6bn in Pakistan, of which $1.6bn was disbursed. The disbursement-to-sanctioning ratio thus worked out at a meagre 34.8pc, according to a recent WB summary on the performance of its project portfolio in the country.

During FY15-FY19, the Bank intends to lend $1.2bn annually to Pakistan. The total investment in FY14 at current prices amounted to $37.5bn, and may reasonably be expected to average around $40-$45bn annually between FY15-FY19. Thus the World Bank’s planned lending accounts for about 2-3pc of its total annual investment in the country.

Though the WB is a trivial source of investment finance, its impact on policy formulation is truly enormous. The source of this influence is ideological, not economic. Our ruling elite accepts the bank’s operational ideology as a gospel truth and falls head over heels to establish its credentials with the World Bank as the true believers.

The WB is conscious that its forum (proselytising) role is far more important than its role as a development financer. Therefore, most of the projects it is financing are of an administrative nature, involving institutional operational guidelines, establishment of regulatory regimes and monitoring mechanisms. These administrative support projects accounted for roughly 57pc of its total commandments, and about 72pc of its disbursement until this April.

The ‘reformed’ institutions continue to function as they have always done while formally complying with the World Bank’s performance requirements

These administration restructuring projects include such major initiatives as ‘Pakistan-- Improvement to Financial Reporting and Auditing’ projects (Pifra I and II), Fata government support, flood cash transfer, Social Safety Network Development, Second Sindh Education Sector Reform etc.

Besides these, almost all projects concerned with energy, infrastructure, education and health investment also have major institutional restructuring components with substantial allocations financing foreign consultancies and research studies.

In Pakistan, as throughout the developing world, institutional restructuring models on the basis of which the bank’s proposed institutional reform programmes are taken almost exclusively from the experiences of Europe and the US, and the ethnographic and local governance processes on the bases of which popular legitimacy of policy is secured in Pakistan are contemptuously ignored.

The result is that so- called ‘reformed’ institutions, which continue to function as they have always done while formally complying with the WB’s performance requirements.

The Pifra has been ongoing since 2005 and will close this December. According to the bank, this has led to “the roll out of a medium-term budgeting framework, effective and transparent financial reporting, control and audit and the (implementation of) effective anti-corruption measures”.

But can anyone believe that corruption within the public sector is now lesser than before Pifra’s launch? If the World Bank cannot cite any evidence for this, then Pifra has clearly failed, despite (or perhaps because of) the institutional restructuring and technological upgrade that has been achieved. The same can be said of the Sindh education project. Institutional restructuring targets have been met, but primary education quality is as abysmal as ever.

The World Bank knows this perhaps better than others, but it continues to emphasise institutional restructuring because this increases its own access to micro-level data in developing countries, besides expanding the scope for recruiting a policy sector clientele that protects and promotes the interest of the donor countries that finance the World Bank.

A fundamental feature of the global ‘aid’ economy is the increasing submergence of multilateral programmes within bilateral donor aid strategies. A wide ranging literature exists to illustrate the important role played by the World Bank in the civil administrative processes of Iraq, Afghanistan and some western African countries.

This close association between multilateral and bilateral aid programmes is illustrated by the fact (as noted by the World Bank) that “the bank manages the Multi Donor Trust for the conflict areas of about $160m”. This fund has 11 active projects in Khyber Pakhtunkhwa and Fata, and it had disbursed $42m in aid by the end of April.

The World Bank itself is heavily committed to the conflict-ridden KP and Balochistan, and here its emphasis is not just on institutional restructuring but also on the rehabilitation of infrastructure projects. Against this, there are only four active projects in Sindh. Of these, the Second Sindh Education project is not yet effective and not a single cent of the $400m IDA loan has been disbursed. This project was approved in March 2013 and is expected to close in less than three years from now.

For the Sindh Skill Development project, an IDA loan of $21m had been approved in May 2011. As of this April, disbursement had amounted to $3.75m (17.8pc). The project will close this December. Disbursement in Sindh up to April amounted to $190m — less than 12pc of the bank’s total disbursement in Pakistan.

No reliable estimates of total investment in Sindh exist, but as calculations by Muhammad Farooq Arby and Muhammad Ajaz Rasheed show, Sindh’s gross provincial product (GPP) is about 30pc of Pakistan’s GDP. And if the share of investment to Sindh’s GPP is assumed to be similar to the share of investment in the country’s GDP (i.e. at 14pc), then the share of World Bank in total investment in Sindh is well below 1pc in a typical year.

The bank is concerned that “disbursements (fell to) just $554m (with a disbursement) ratio of about 20pc in FY13 (and) the disbursement performance has lagged in the past couple of years”. The FY2015-19 annual disbursement target is $1.2bn, which, even if met (of which there is little probability), will not even be a drop in the ocean as far as the country’s investment needs are concerned.

In FY13, the World Bank’s total disbursements to Pakistan amounted to $554m, but we paid back $46.7m as principal and interest charges. Thus, the net inflow was only $469.7m. Principal and interest payments to the World Bank rose to $515.1m in FY14.

Figures have not been provided for the bank’s disbursements for FY14, but even if net disbursements (gross disbursements minus principal and interest payments) equal $100m — this will be well below 0.1pc of total investment in the country that year.

The truth is that Pakistan does not need World Bank assistance. Amounts disbursed are too small and hedged around with performance conditionalities designed to meet donors’ needs. They are quite irrelevant in meeting the objectives of eliminating corruption and enhancing development management efficiency.

The writer heads the Centre for Development Studies, IoBM Karachi

Published in Dawn, Economic & Business, September 29th, 2014