Loan To Be Given By WorldBank To Sindh Government
Loan To Be Given By WorldBank To Sindh Government: The Sindh government has submitted a request to the World Bank for a loan of $200 million for enhancing the institutional performance and management capacity of the Karachi Metropolitan Corporation (KMC) and District Municipal Corporations (DMCs) and improve provision of municipal infrastructure in the provincial metropolis.
The WB agreed in principle to sanction the loan and a process in this regard had begun.
The project will totally be financed by the International Development Association (IDA), an affiliate of the World Bank group. Karachi’s local governments have limited financial management capacity and limited authority over major sources of revenue.
The city needs an estimated investment of $9 billion to $10bn over the coming years to close the infrastructure and revenue gap, yet infrastructure spending is well below these requirements.
The poor level of urban infrastructure and basic service provision in the city reflects two underpinning challenges. These are financial constraints for capital investments, due to poor own-source revenue (OSR) generation and very low cost-recovery for services; and low institutional capacity, as a result of institutional fragmentation, weak systems and capacity for urban governance and service delivery agencies, and unclear and overlapping responsibilities.
The loan will be used for strengthening institutional and financial capacity of KMC and six DMCs
Inadequate availability of financing is largely due to very low collections of the urban immovable property tax in Sindh. Like in other provinces, such tax is collected by the provincial government and then partly transferred to various municipal entities. Capital expenditure represents only eight per cent of the KMC and 18pc of DMCs’ budgets.
The local governments are financially weak with a high dependence on fiscal transfers from the Sindh government and have limited authority over major sources of own-source revenue such as property taxes.
The project will address local governments’ weak municipal management capacity and limited financial resources for capital expenditure. It would focus on strengthening the institutional and financial capacity of the KMC and six DMCs to deliver and maintain critical urban infrastructure and services. It builds on analytical work and consultations conducted by the bank on the identification of critical needs of the city.
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