Document of  The World Bank  FOR OFFICIAL USE ONLY      Report No: ICR00004647            IMPLEMENTATION COMPLETION AND RESULTS REPORT     ON A  CREDIT    IN THE AMOUNT OF SDR 222.1 MILLION  (US$ 301.60 MILLION EQUIVALENT)  TO     THE ISLAMIC REPUBLIC OF PAKISTAN    FOR THE    FINANCE FOR GROWTH DEVELOPMENT POLICY CREDIT (FGDPC)     December 10, 2019                                                                                                                                                                                                               Finance, Competitiveness and Innovation Global Practice  South Asia Region    The World Bank      Finance for Growth Development Policy Financing (P161136)            CURRENCY EQUIVALENTS Exchange rate effective as of January 31, 2017 Currency Unit = Pakistani Rupees US$ 1.00 = PKRs 104.805 US$ = SDR 0.73593 FISCAL YEAR July 1 – June 30 Regional Vice President: Hartwig Schafer Country Director: Patchamuthu Illangovan Regional Director: Zoubida Kherous Allaoua Practice Manager: Nabila Assaf Project Team Leader: Gabi George Afram ICR Team Leader: Namoos Zaheer ICR Team Author: William Wallace   Page 2 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)          ABBREVIATIONS AND ACRONYMS  Anti‐Money Laundering / Combating AML/CFT Financing of Terrorism NPLs Non‐performing loans BOP Balance of Payments PKR Pakistan Rupee CAS Country Assistance Strategy RAS Reimbursable Advisory Service CDNS Central Directorate for National Savings ICR Implementation Completion Report CFAA Country Financial Accountability Assessment JSAN Joint Staff Advisory Note Competitiveness and Growth Development CGDPF Policy Financing KYC Know‐your‐customer CPEC China Pakistan Economic Corridor LDP Letter of Development Policy DFID Department for International Development MDGs Millennium Development Goals DTA Digital Transaction Accounts MOF Ministry of Finance DPC Development Policy Credit MTEF Medium‐Term Expenditure Framework DPO Development Policy Operation NFIS National Financial Inclusion Strategy ECC Economic Coordination Committee NICL National Insurance Company Limited EFF Extended Fund Facility NRA National Risk Assessment EMBI+ Emerging Market Bonds Index Plus NSS National Savings Schemes FATF The Financial Action Task Force PDF Pakistan Development Fund Public Expenditure and FBR Federal Board of Revenue PEFA Financial Accountability FDI Foreign Direct Investment PER Public Expenditure Review FGDPC Finance for Growth Development Policy Credit PFM Public Financial Management FIIP Financial Infrastructure and Inclusion Project PPAF Pakistan Poverty Alleviation Fund FRDLA Fiscal Responsibility and Debt Limitation Act PRCL Pakistan Reinsurance Company Limited FSAP Financial Sector Assessment Program REER Real Effective Exchange Rate Report on the Observance of Standards FSIG Fiscally Sustainable and Inclusive Growth ROSC and Codes GCC Gulf Cooperation Countries SBP State Bank of Pakistan GDP Gross Domestic Product SDR Special Drawing Rights Securities and Exchange Commission GNP Gross National Product SECP of Pakistan GOP Government of Pakistan SLIC State Life Insurance Corporation GRS Grievance Redress Service SOE State Owned Entities IBRD International Bank for Reconstruction and UNDP United Nations Development Program D l IDA International Development Association S&P Standard & Poor’s IFC International Finance Corporation SMEs Small and Medium Enterprises IMF International Monetary Fund SROs Statutory Regulatory Orders ISR Implementation Status and Results Report TA Technical assistance International Organization of Securities Trust Fund for Accelerating Growth IOSCO TAGR and Reforms Commissions United States Agency for International MSCI Morgan Stanley Capital International USAID Development NEPRA National Electric Power Regulatory Authority WB World Bank NIFT National Institutional Facilitation Technologies WBG World Bank Group   Page 3 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)        ISLAMIC REPUBLIC OF PAKISTAN Finance for Growth Development Policy Financing     Contents  A. BASIC INFORMATION  _______________________________________________ 6  B. KEY DATES  _________________________________________________________ 6  C. RATINGS SUMMARY  ________________________________________________ 6  C.1 Performance Rating by ICR ___________________________________________ 6  C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) ______________ 6  C.3 Quality at Entry and Implementation Performance Indicators ______________ 7  D. SECTOR AND THEME CODES  ________________________________________ 7  E. BANK STAFF  ________________________________________________________ 7  F. RESULTS FRAMEWORK ANALYSIS ___________________________________ 8  F.1 Program Development Objectives _______________________________________ 8  F.2 PDO Indicator(s) _____________________________________________________ 8  G. RATINGS OF PROJECT PERFORMANCE IN ISRs ______________________ 10  H. RESTRUCTURING __________________________________________________ 10  1.  PROJECT CONTEXT, DEVELOPMENT OBJECTIVES AND DESIGN ___ 10  1.1  Context at Appraisal _______________________________________________ 12  1.2  Original Project Development Objectives (PDO) and Key Indicators _______ 14  1.3  Revised PDO and Key Indicators, and reasons/justification _______________ 15  1.4  Revised Policy Areas _____________________________________________ 18  1.5  Other significant changes __________________________________________ 18  2.  KEY FACTORS AFFECTING IMPLEMENTATION AND OUTCOMES __ 19  2.1  Major Factors Affecting Implementation ______________________________ 19  2.2  Monitoring and Evaluation (M&E) Design, Implementation and Utilization _ 22  3.  ASSESSMENT OF OUTCOMES  _____________________________________ 23  3.1  Relevance of Objectives, Design and Implementation ____________________ 23  3.2  Achievement of Program Development Objectives_______________________ 23  a.  Efficiency ________________________________________________________ 27  b.  Justification of Overall Outcome Rating _______________________________ 27  Page 4 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      c.  Overarching Themes, Other Outcomes and Impacts _____________________ 27  4.  ASSESSMENT OF RISK TO DEVELOPMENT OUTCOME _____________ 28  5.  ASSESSMENT OF BANK AND BORROWER PERFORMANCE _________ 29  6.  LESSONS LEARNED ______________________________________________ 31  7.  COMMENTS ON ISSUES RAISED BY BORROWER/IMPLEMENTING AGENCIES/PARTNERS  ___________________________________________ 32  Annex 1: Financial Sector Prior Actions from FISG series and CGDPF __________ 33  Annex 2: Bank Lending and Implementation Support/Supervision Processes _____ 34  Annex 3: Summary Of Borrower's ICR and/or Comments On Draft ICR (if any)  _ 35  Annex 4: List of Supporting Documents  ____________________________________ 36  Annex 5: Key Economic Priorities of the Government of Pakistan  ______________ 37  Annex 6: Analytical Underpinnings ________________________________________ 38  Annex 7: Letter from Ministry of Finance (non -public results targets)  __________ 39          Page 5 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      A. BASIC INFORMATION Country: Pakistan Program Name: Pakistan: Finance for Growth DPC Program ID: P161136 L/C/TF Number(s): IDA-59750,IDA- 59760,IDA-59770 ICR Date: 10/09/2018 ICR Type: Core ICR Financing Instrument: DPL Borrower: ISLAMIC REPUBLIC OF PAKISTAN Original Total USD 301.60M Disbursed Amount: USD 301.38M Commitment: Revised Amount: USD 301.60M Implementing Agencies: Co-financiers and Other External Partners: B. KEY DATES Process Date Process Original Date Revised / al Date Concept Review: 09/29/2016 Effectiveness: 04/05/2017 Appraisal: Restructuring(s): Approval: 03/15/2017 Mid-term Review: Closing: 06/30/2018 06/30/2018 C. RATINGS SUMMARY C.1 Performance Rating by ICR Outcomes: Moderately Unsatisfactory Risk to Development Outcome: Substantial Bank Performance: Moderately Satisfactory Borrower Performance: Moderately Unsatisfactory C.2 Detailed Ratings of Bank and Borrower Performance (by ICR) Bank Ratings Borrower Ratings Quality at Entry: Moderately Satisfactory Government: Moderately Unsatisfactory Quality of Supervision: Moderately Satisfactory Implementing Moderately Agency/Agencies: Unsatisfactory Page 6 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      Overall Bank Moderately Satisfactory Overall Borrower Moderately Performance: Performance: Unsatisfactory C.3 Quality at Entry and Implementation Performance Indicators Implementation Indicators QAG Assessments (if Rating Performance any) Potential Problem Program No Quality at Entry (QEA): None at any time (Yes/No): Problem Program at any No Quality of Supervision None time (Yes/No): (QSA): DO rating before Closing/Inactive status: D. SECTOR AND THEME CODES Original Actual Sector Code (as % of total Bank financing) Financial Sector Insurance and Pension 10 10 Banking Institutions 90 90 Theme Code (as % of total Bank financing) Finance 40 40 Finance for Development 20 20 Infrastructure Finance 20 20 Financial Infrastructure and Access 40 40 Financial inclusion 40 40 Financial Stability 40 40 Financial Sector Integrity 30 30 Human Development and Gender 10 10 Gender 10 10 Private Sector Development 10 10 Business Enabling Environment 10 10 Investment and Business Climate 10 10 E. BANK STAFF Positions At ICR At Approval Vice President: Hartwig Schafer Annette Dixon Page 7 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      Country Director: Patchamuthu Illangovan Patchamuthu Illangovan Practice Manager/Manager: Nabila Assaf Niraj Verma Project Team Leader: Gabi George Afram Gabi George Afram ICR Team Leader: Namoos Zaheer ICR Primary Author: William Wallace   F. RESULTS FRAMEWORK ANALYSIS   F.1 Program Development Objectives The development objective (DO) of the operation was to support the Government of Pakistan’s efforts in promoting an inclusive and transparent financial sector, that is better able to intermediate resources for long-term finance. The DO was achieved through the following three pillars: (i) Improving access to finance and enhancing financial inclusion; (ii) Fostering long-term finance; and (iii) Enhancing transparency of the financial sector F.2 PDO Indicator(s) Pillar 1: Improving access to finance and enhancing financial inclusion Formally Original Target Actual Value Baseline Value Revised Indicator Values Achieved at (July 1, 2016) Target (June 30, 2018) Target Date Values Number of 45 million 50 million 53 million transactional accounts; N/A Segregated by 7 million (female) 7.5 million 15.2 million gender Comments: The target was achieved; however, this may not be directly attributable to the Prior Action since the Digital Transaction Account which was approved as the action was not implemented by the target date. However, the Bank’s ongoing technical support on financial inclusion (though a Trust Fund and an IPF) may have contributed to the increase in number of transaction accounts overall. (%) NSS profits 5% of 7 million 2.8% of 2.4 distributed through 0% N/A NSS accounts million accounts bank accounts Comments: The target was partially achieved. However, while the target suggests there are 7 million NSS accounts; there are 2.4 million accounts and 7 million investments. (Each account holder can have multiple investments through different savings certificates). Regardless, strong progress was made because of this action. Page 8 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      Number of Registered 65,735 70,000 N/A 85,401 Companies Comments: The target was more than achieved. The achievement of this result is directly attributable to the Prior Action as the consolidation of the Companies Act can be directly attributed to the increase in number of registered companies. Deposit Base of PKR 12.5 PKR 11 trillion PKR 12.5 trillion N/A Banking Sector trillion Comments: While the target was achieved, for the Deposit Protection Act to be implemented the Deposit Protection Corporation needs to be established. The Corporation was formally established on June 1, 2018, almost at the target date. However, the passing of the law may have served as a signal to the market and boosted depositor confidence, leading to an increased depositor base. Pillar 2: Fostering long-term finance Long-term loans 8.8% (> 5 years) as % of (June 2015; data not 10% N/A 8.9% available for baseline banking sector loans date) Comments: The target was not achieved but there was an upward movement. However, this was a very marginal increase, even though the baseline was from 3 years prior. Pillar 3: Enhancing transparency of the financial sector Adjudicating Adjudicating No No Adjudicating Authority appointed Authority appointed N/A Adjudicating Body in place & operationalized & operationalized Body in place Comments: Target not achieved. An Adjudicating Body for Benami accounts would have been put in place only after the rules and regulations for the newly enacted Benami Law were in place. These rules and regulations were formally launched after significant delay in March 2019. Only verifiable Pakistan remains in Pakistan in Pakistan remains in after target date compliance with compliance with compliance with N/A due to timing of FATF FATF FATF compliance Recommendation-1 Recommendation-1 Recommendation-1 review Comments: Only a Mutual Evaluation can determine if a country is complaint with FATF Recommendations. Pakistan’s Mutual Evaluation process was completed in late 2019, as such, we could not confirm the status of this results indictor by the target date. Pakistan was put on the FATF grey list in June 2018 and this was reconfirmed after the Mutual Evaluation in October 2019, this would indicate weaknesses in compliance with Recommendation 1. Value of registered bonds as % of 0% 2% N/A 0.7% outstanding bonds Comments: Target partially met. Moving from 0 percent registered bonds to 0.7 percent registered bonds in a couple of years is reasonable outcome. Chairman & CEO Chairman & CEO Chairman & CEO of Chairman & of SLIC meet fit & roles merged SLIC meet fit & N/A CEO roles proper criteria therefore do not proper criteria remain merged Page 9 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      meet fit & proper therefore do not criteria meet fit & proper criteria Comments: Target not achieved, due to limited buy-in from key stakeholders. G. RATINGS OF PROJECT PERFORMANCE IN ISRs Not Applicable No. Date ISR GEO IP Actual Archived Disburs ements (USD millions ) H. RESTRUCTURING (IF ANY) Not Applicable        1. PROJECT CONTEXT, DEVELOPMENT OBJECTIVES AND DESIGN 1. This Implementation Completion and Results Report (ICR) assesses the results of the Finance for Growth Development Policy Credit (FGDPC) to the Islamic Republic of Pakistan. The operation aimed to support the Government of Pakistan’s (GoP’s) financial sector development and reform agenda. The focus was on building an inclusive and transparent financial sector, better able to intermediate resources, including for long term finance. The US$ 301.6 million International Development Association (IDA) and IDA Scale up Facility (IDA SUF)1 DPC was approved by the Board of Directors March 15, 2017 and closed on June 30, 2018. 2. Upon taking office in 2013, the previous government introduced a program of stabilization measures to address the country’s macroeconomic imbalances and initiated reforms to improve overall economic efficiency.2 These reforms complemented, and were reinforced by, an International Monetary Fund (IMF) Extended Fund Facility (EFF). The World Bank’s technical assistance and lending program was also designed to support the ongoing reform agenda of the government. The World Bank’s program focused on growth- enhancing reforms, building on the diagnosis done for the World Bank’s Country Economic Memorandum (June 2013). This was incorporated in the Country Partnership Strategy                                                              1 IDA SUF is a hybrid between an IDA credit and standard International Bank for Reconstruction and Development (IBRD) loan. 2 At inception these included reforms to the energy sector, privatization, tax reform, financial inclusion, tariff rationalization and investment (around Doing Business Indicators). See Annex 6 for more details. Page 10 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      (CPS) 2015-2019 which was subsequently extended to 2020 through a Performance and Learning Review (March 2017).3 3. Bank support was provided through increased investment and development policy lending, along with strategic guarantees designed to leverage private sector financing. Development policy operations included a two series Development Policy Credit (DPC) titled Fiscally Sustainable and Inclusive Growth (FSIG) in May 2014 and June 2015 and a subsequent stand-alone operation titled Competitiveness and Growth Development Policy Financing (CGDPF) in June 2016. In addition to the DPF, the CGDPF included a policy-based guarantee to increase and diversify the government’s sources of finance. All these operations were successful; both the FSIG series and CGDPF had Moderately Satisfactory outcome ratings. These operations were complemented by a parallel series of development policy credits in the power sector. 4. There was, largely, continued success in the financial sector measures which were part of FSIG and CGDPF, however further strategic interventions were required to unlock constraints in developing Pakistan’s financial sector. The government was very committed to developing the financial sector at the time, so there was reform momentum which could be leveraged. The Development Module Financial Sector Assessment Program (FSAP) completed in 2016 also highlighted the need for greater financial intermediation in Pakistan to achieve sustained growth going forward. In addition to this, the Bank was developing a financial sector investment operation (the Pakistan Financial Inclusion and Infrastructure Project- P159428) and a Housing Finance Project (P162095) was also in the pipeline. Concurrently, the Bank had multiple technical assistance programs which were supporting the development of the sector. The technical assistance running in tandem with FGDPC included work on digital payments, AML/CFT, insurance sector reform and secured transactions (to name a few). Preparation of the FGDPC was initiated right after the completion of the Development Module FSAP. The financial sector in Pakistan primarily intermediates for the government, substantially crowding out the private sector. Broadening the financial sector (by increasing access to finance) and deepening it (by developing infrastructure finance and capital markets) while enhancing its transparency and governance were the three key emphasis areas of the FSAP, which were the reform areas FGDPC took forward. 5. These reforms were required as they would lead to increased savings and investment which are much needed in Pakistan. Pakistan has one of the lowest savings rates in the region (10.6 percent of GDP in FY18) and its investment to GDP is also very low compared to peer countries (16.4 percent in FY18, of which only 10% was private sector). This package of support was designed to yield significant economic impacts by expanding and deepening the financial sector. As such, the Bank developed another stand-alone DPC operation, focused on financial sector actions titled the Finance for Growth Development Policy Credit (FGDPC); the subject of this ICR.                                                              3 The CPS focused on (i) transforming the energy sector; (ii) developing the private sector; (iii) reaching out to the underserved, neglected, and poor (including micro, small, and medium enterprises); and (iv) improving service delivery (reduce vulnerability to income shocks, accelerate improvements in services, increase revenue to fund service delivery). Page 11 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      1.1 Context at Appraisal 6. The economic slowdown between 2008-2013 had added considerable pressure on the financial sector’s resilience to credit, market and liquidity risks, with mixed outcomes across the financial sector. Prior to this, the newly reformed banking sector was lending quite aggressively to the private and consumer sector; spurred by the fact that the government’s borrowing needs were limited due to significant external inflows at the time. However, the energy crisis and a worsening security situation negatively impacted private sector development and NPLs rose rapidly. In this environment, (from 2008-2014), commercial banks substantially restricted their lending to the private sector, especially to SMEs. At the same time, the government’s spending started growing rapidly and external inflows decreased. In the face of low revenue collection, its borrowing requirement from domestic commercial banks grew dramatically. This period of increased lending to the government fundamentally altered the risk appetite and intermediation role of the financial sector. Since then, the government remains the dominant borrower in Pakistan’s financial markets. Investments in government paper constitutes about 45 percent of banking sector assets. 7. While volatile private sector credit was partly a result of increased government borrowing, there remained significant gaps in Pakistan’s financial infrastructure and legal framework which further reduced commercial banks appetite to lend to the private sector. The financial sector reforms in FSIG I & II, CGDPF and finally in FGDPC, were designed start the process of systematically tackling these structural issues by creating the enabling environment for improved access to credit for the private sector. The financial sector actions from FSIG I & II and CGDPF are in Annex 1. Table 1: Pakistan Key Macroeconomic Indicators (FY 14/15 to FY 18/19) FY 14/15 FY 15/16 FY 16/17 FY 17/18 FY 18/19 Real Economy GDP growth (factor cost) 4.1 4.6 5.2 5.5 3.3 Gross Investment (% GDP) 15.7 15.7 16.1 16.4 15.4 Consumer prices (per avg) 4.5 2.9 4.2 3.9 7.1 Fiscal Sector Revenue 14.3 15.3 15.4 15.2 15.7 Overall budget balance -5.3 -4.6 -5.8 -6.6 -7.0 (ex grants) Total public debt 64.3 68.7 67.9 73.5 82.3 Monetary/Financial Sector Credit to private sector 5.9 11.2 16.8 14.9 14.3 Real deposit rate 1/ 1.0 1.3 -0.8 -0.4 -1.2 Gross savings (% of GDP) 2/ 14.7 14.0 12.0 10.6 10.8 Non-Performing Loans (%) 3/ 13.3 12.2 11.0 9.2 8.1 Balance of Payments Page 12 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      Current account balance 4/ -1.0 -1.7 -4.1 -6.1 -5.6 Export growth (%) -3.9 -8.8 0.1 12.8 1.5 Import growth (%) -0.7 -0.2 18.0 15.0 -1.8 Capital financial balance 2.0 2.5 3.5 4.4 5.7 Gross reserves (USD) 5/ 14,836 19,446 17,550 11,364 12,273 Gross reserves (mth) 6/ 3.6 4.0 3.1 2.1 2.4 Sources: Pakistan authorities, World Bank Staff Estimates, Global Economic Prospects Report Notes: 1/ Average weighted; 2/ Gross investment plus current account balance; 3/Share to gross advances; 4/ Including transfers; 5/SBP gross reserves (eop); 6/In months of imports of goods and services 8. At the time the FGDPC was prepared (end 2016), the reforms around fiscal consolidation and revenue mobilization instituted by the government appeared to be paying off. However, despite the improving macro-economic indicators, investment rates and financial intermediation remained low, creating a major constraint to private sector growth and development. The government’s target was to raise growth to 6-7 percent and create quality jobs for the two million additional youth entering the labor force every year; this would require doubling investment to 30 percent of GDP. Improving the investment climate, along with reducing the governments crowding out and improving overall access to finance, would encourage private sector credit and investment required to achieve this goal. 9. Despite the government’s strong initial push for reform, once the IMF program ended in 2016, macroeconomic difficulties were re-emerging at the time of appraisal (early 2017). Pakistan’s economic landscape has been dominated by periods of higher consumption driven growth (as was evident from 2014 to 2016) followed by a severe contraction (which was becoming the case in early 2017). Fiscal discipline started slipping after the end of IMF program and the exchange rate, already overvalued, did not adjust in line with the changing economic conditions. By mid-2017, election mode had set in; the government’s FY18 budget reduced income tax thresholds, increased fiscal exemptions, increased import tariffs and kept the exchange rate overvalued4. Exports fell (-8.8 percent YoY in FY 15/16), resulting in a rapidly widening current account deficit5. Public debt levels remained above their legislative threshold, and deficits were financed through substantial increases in borrowing from the banking system, exacerbating the ongoing crowding out problem. The changing political environment due to the extenuating circumstances at the time, resulted in a considerable slowing down of the reform momentum6.                                                              4  These measures were further amplified in the FY 19 budget.  5  The government did make some efforts to adjust the exchange rate at time, but in the absence of a policy for a more flexible exchange rate, the impact was limited.  6  The Panama Papers in mid-2016 were an unprecedented leak of 11.5m files from the database of the world’s fourth biggest offshore law firm, Mossack Fonseca. Twelve national leaders were among 143 politicians, their families and close associates from around the world known to have been using offshore tax havens. Nawaz Sharif, the Pakistani Prime Minister at the time, was one of the national leaders implicated.     Page 13 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      1.2 Original Project Development Objectives (PDO) and Key Indicators   10. The FGDPC operation supported the GoP’s efforts to create an inclusive and transparent financial sector, better able to intermediate resources including long term finance. The operation was structured around three pillars: (i) Improving access to finance and enhancing financial inclusion; (ii) Fostering long‐term finance; and (iii) Enhancing transparency of the financial sector. Table 2: List of Actions and Related Results Prior Actions Results (Target= June 30, 2018; Baseline= July 1, 2016) Pillar 1: Improving access to finance and enhancing financial inclusion The NFIS Council has approved the Digital Transaction Results Indicator: Number of transactional Accounts (DTA) scheme. accounts, segregated by gender Baseline: 45 million (women 7 million) Target: 50 million (women 7.5 million) The SBP has granted clearinghouse membership of the Results Indicator: (%) of NSS profits distributed National Institutional Facilitation Technologies (NIFT) to through bank accounts the Central Directorate of National Savings (CDNS) to Baseline: 0% allow for distribution of NSS profits through bank Target: 5% out of more than 7 million NSS accounts. accounts The National Assembly has approved the new Companies Results Indicator: (%) increase in number of Bill to modernize the regulatory framework for companies companies registered Baseline: 65735 (source: SECP website) Target: 70000 The Deposit Protection Corporation Act 2016 has been Results Indicator: Deposit base of banking sector approved by Parliament. Baseline= PKR 11 trillion (US$ 105 billion) Target = PKR 12.65 trillion (US$ 120.7 billion)(15 percent) Pillar 2: Fostering Long-term finance The ECC has approved the National Policy on Results Indicator: long-term loans (contractual Infrastructure Finance tenor greater than 5 years) as (%) of total banking The SBP has issued Prudential Regulations for long-term sector loans finance (in line with Basel III requirements) Baseline: 8.8% (June 2015) Target= 10% Pillar 3: Enhancing Transparency of the financial sector The Benami Transaction Prohibition Bill has been Results Indicator: Adjudicating authority approved by Parliament. appointed and operationalized Baseline: No Adjudicating body in place Target: Adjudicating authority appointed and operationalized The Ministry of Finance has completed the National Risk Results Indicator: Pakistan remains in compliance Assessment (NRA) for Anti-Money Laundering and with FATF Recommendation-1 Combatting Financing of terrorism (AML/CFT). Baseline Pakistan has been in compliance with FATF Recommendation-1 since 2014 Target: Pakistan remains in compliance with FATF Recommendation-1 Page 14 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      The Cabinet has approved the rules for a new registered Results Indicator: value of registered prize bonds prize bonds scheme with denomination of PKR 40,000 as a share of outstanding prize bonds and above Baseline: 0 percent Target: 2 percent The Ministry of Commerce and SECP have completed the Results Indicator: The Chairman and Chief Corporate Governance Assessment for SLIC to monitor Executive Officers (CEOs) of SLIC meet the fit compliance with the Public Sector Companies (Corporate and proper criteria Governance) Rules 2013. Baseline: Chairman and CEO role is merged and thus not fit and proper Target: Fit and Proper Chairman and CEO   1.3 Revised PDO and Key Indicators, and reasons/justification  There were no revisions to the PDO and key result indicators. Original Policy Areas Supported by the Program   11. Pillar 1: Improving Access to Finance and Enhancing Financial Inclusion: The FGDPC, built on Pakistan’s National Financial Inclusion Strategy (NFIS; 2015) to address issues of financial inclusion and access to credit. Two measures focused on improving access to formal financial systems with the expectation that this would lead to increased savings, particularly in banks. A third measure focused on improving corporate access to credit. A fourth measure aimed at increasing savings and intermediation focused on the creation of a Deposit Insurance Corporation, to improve depositor confidence. 12. Digitizing the Financial Sector – while Pakistan’s overall financial sector is underdeveloped, mobile banking is comparatively more advanced. In Pakistan, 5.8 percent of the adult population has mobile accounts, compared to the South Asian average of 1.9 percent, with a far higher percentage of these accounts (compared to peer countries) held by women. However, this expansion was limited by a lack of interoperability among providers and platforms (for technical and competitive reasons). Thus, the FGDPC supported the approval of a DTA scheme (designed by the Central Bank), the implementation of which would develop an affordable, accessible, inter-operable and technology-led platform for financial services. 13. Linking the National Savings Scheme (NSS) to the banking system. – Pakistan’s NSS, administered by the Central Directorate of National Savings (CDNS), has been a large part of the financial sector for many years. Its investments amounted to 30 percent of banking deposits and 24 percent of the GoP’s domestic debt. Most NSS transactions, including purchases, interest payments and retirement of savings certificates have historically been done in cash at a CDNS outlet with limited KYC requirements. As a first-step to integrate these accounts into the financial sector, the CDNS needed to gain clearinghouse membership in the National Institutional Facilitations Technologies (NIFT), which this operation supported. NIFT is responsible for the establishment and management of automated clearinghouse facilities in Pakistan. With this membership, the NSS will be able Page 15 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      to issue cheques to distribute NSS profits (interest) and other transactions to customer bank accounts and motivate them to obtain and/or use bank accounts. 14. Improving corporate creditworthiness– The GoP remains focused on improving private- sector performance and access to credit. This was to be achieved in part, through the approval of a revised Companies Bill. The old legislation was an amalgam of amendments to a 1984 Companies Ordinance that had resulted in layers of subsidiary legislation. The revisions to the Company Bill enhanced reporting, streamlined company procedures, encouraged electronic business registration and fostered better use of technology. These measures were designed to increase formality and efficiency, improve access to credit and spur investment. 15. Increasing depositor confidence — The FGDPC supported the enactment of the Deposit Protection Act which would lead to the establishment and operationalization of a Deposit Protection Corporation (DPC). An operational DPC would increase depositor confidence, assist in the resolution of troubled/failed banks and level the playing field between smaller and larger banks. International experience indicated that institutions like the DPC increase confidence in the banking system and therefore foster greater financial inclusion. 16. Pillar 2: Fostering long-term finance. The banking sector’s deposit-to-GDP ratio was about 37.6 percent at the end June 2016. Most of these deposits were of shorter maturity. This clearly hampered the ability of banks to provide longer-term financing, which is generally required to make capital investments. Long-term finance is particularly important for infrastructure investments like those required under the China–Pakistan Economic Corridor (CPEC). Pakistan will need to develop and finance corollary infrastructure which, in turn requires increased long-term finance out of Pakistan’s own financial sector. The measures in the FGDPC focused on the GoP’s efforts to foster long-term finance for infrastructure and mitigate risks involved in extending loan maturities. Two measures drawn from the 2016 FSAP were included. 17. Mobilizing Infrastructure finance – The operation supported the development of a National Policy on Infrastructure Finance. After an extensive consultation process the policy proposed to create synergies between local sources of finance (GoP budget, banks, Islamic institutions, cash in SOEs and capital markets) and international sources (FDI and development partners). 18. Mitigating long-term finance risks – The operation supported development of Prudential Regulations for long-term finance. In the case of Prudential Regulations supported in this Prior Action, there was a focus on infrastructure project finance, guidance on liquidity mismatch reporting, credit appraisal and collateral arrangements. The dissemination of these regulations/guidelines was expected to increase banks engagement in infrastructure finance. Page 16 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      19. Pillar 3: Enhancing Transparency of the Financial Sector : Pakistan’s FSAP completed in 2016 identified the need for strengthening the financial sector’s resilience and stability. This could be achieved by reinforcing the regulatory and supervisory frameworks as a priority. Improving the Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT) legal framework was (and remains) a priority for financial integrity and stability. Additionally, it was (and remains) very important to have systems and controls to detect the flow of proceeds of corruption, and to ensure tax compliance. 20. Curbing Money Laundering and Terrorist Financing— The completion of a National Risk Assessment (NRA) for AML/CFT was needed to identify risk mitigation strategies that would allow Pakistan to move towards greater compliance with the Financial Action Task Force (FATF). As a result of the NRA, an AML/CFT Strategy was to be developed. The strategy should include an implementable and time bound action plan with roles and responsibilities. The NRA identified the AML/CFT risks and based on these Pakistan’s law enforcement agencies were to be tasked with the development of risk mitigation strategies. 21. Prohibiting Benami transactions – Prevalence of Benami transactions, wherein a property transaction is done in the name of someone else (not the property holder and often fictitious) led to money laundering and tax avoidance in Pakistan. The Benami Transactions Prohibition Bill and the appointment and operationalization of the Adjudicating Authority for Benami transactions, was seen to address this problem. The Bill forbade holding property in Benami and limited the transfer of existing Benami property. With the new law, the onus of proving ultimate ownership of a property now falls on the owner, failure to do so leads to confiscation, with possible criminal charges. 22. Formalizing Prize Bonds -- Prize Bonds are opaque open-ended bearer instruments used to tap long-term retail savings by the GoP and are often used as a currency substitute. They amounted to close to 20 percent of currency in circulation in FY17. The unregistered nature of these bonds leads to tax avoidance and money laundering. The operation supported the formalization of bonds with a domination of PKR 40,000 and above (around 250 USD) through registration of these instruments. The expansion of registered bonds would, it was hypothesized, lead to greater transparency and to substitution from these into conventional banking products improving intermediation. 23. Improved governance in the insurance sector – The final measure supported a Corporate Governance Assessment of the State Life Insurance Company (SLIC). SLIC holds almost 50 percent of the life insurance market of Pakistan. Given its dominant role and the risks this creates, improved corporate governance for SLIC is very important. SLIC is also constraining the development of insurance more broadly, i.e. the entry of private sector competitors. Previous operations (CGDPF) supported the corporatization of SLIC (2016)7; this action was rolled back as the law was passed by the Parliament but not the Senate. The Corporate Governance Assessment, done by the IFC in late 2016 focused on SLIC’s compliance with underlying Public Sector Company Corporate Governance Rules (2013),                                                              7 The corporatization of SLIC was not achieved as expected under the previous operations. Page 17 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      SECP Codes of Corporate Governance for Insurers (2016) and international best practices. The Prior Action was the endorsement of this Assessment by the Ministry of Commerce (under which all public sector insurance companies fall) with the understanding that once endorsed, remedial actions recommended in the Assessment would be undertaken leading to improvements in SLIC’s corporate governance. 1.4 Revised Policy Areas N/A   1.5 Other significant changes N/A Page 18 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      2. KEY FACTORS AFFECTING IMPLEMENTATION AND OUTCOMES  2.1 Major Factors Affecting Implementation Soundness of Background Analyses: 24. The FGDPC continued to build on the financial sector themes in the CGDPF and prior FISG operations. As such, it leveraged the analysis and experience from those operations. More specifically, the reform actions in this DPC were chosen from the analytical work done for Pakistan’s National Financial Inclusion Strategy (2015) and it’s eight complimentary Technical Notes. (Completed under Reimbursable Advisory Services (RAS) to the State Bank of Pakistan8). The most recent analytical work was the Development Module FSAP from 2016. This was complemented by separate FSAP Technical Notes on Islamic Finance, Financial Sector Intermediation (Sources and Uses of Funds), Debt Capital Markets and Infrastructure Finance. The analytical sources for each action in FGDPC are found in Annex 6. The macroeconomic analysis drew on the previous operations and the Bank’s engagement with Ministry of Finance around them. Operation Design:   25. The FGDPC design built upon the reform agenda from previous development policy lending operations and was also designed to complement existing and proposed financial sector engagements. The FGDPC was conceived at a time when the Bank had an extensive technical assistance program on Pakistan’s financial sector. With financial intermediation in all sub-sectors of the financial sector much lower than in peer countries, the World Bank Group teams deployed (over the period FY15-FY18) several operations using a variety of instruments to support the development of Pakistan’s financial sector. These efforts included:  TA to revamp the insurance sector’s legal and regulatory framework (FY15-16)  TA to develop and help implement National Financial Inclusion Strategy (NFIS) (FY15-18)  TA to support the AML/CFT framework, including preparing the NRA (FY13-17)  TA on setting up a Secured Transition Registry (FY15-19)  TA on improving credit information (FY14-18)  IPF to support the microfinance sector, financial inclusion, payment systems reform, and reforms to the CDNS (FY17-21) - Financial Infrastructure and Inclusion Project (FIIP) 26. This intensive program of technical assistance and related lending operations were undertaken in support of the policy areas covered by the three pillars of the FGDPC. In addition to this, the CGDPF financial sector reforms had gone relatively well and the government’s commitment seemed to be on-track; this created space for a stand-alone financial sector DPC. The operation was designed to take advantage of the NFIS, FSAP and other analytics, and built on the ongoing TA program, as such, it stood a strong                                                              8 These RAS Technical Notes were on: (1) Digital accounts, (2) agriculture finance, (3) housing finance, (4) insurance, (5) Islamic finance, (6) Medium, Small and Micro enterprise (MSME) finance, (7) payment systems and (8) pensions. Page 19 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      chance of being successful despite the looming election. In addition to this, the operation demonstrated the following strengths:  To minimize reversals (a lesson from earlier operations), legal prior actions had extensive stakeholder consultation.  Complementary technical assistance continued to be provided in parallel, by the WBG and other partners, including the IMF, Gates Foundation, DFID and USAID. All this contributed to improved supervision and monitoring.  Another lesson learned from CGDPF was on the need to redefine and or drop engagements to make them more tenable yet still have impact. For example, the FGDPC engagement on insurance sector governance was scaled back (from measures in the CGDPF) to something the team felt was achievable9. On a less positive note, the design had certain deficiencies, particularly regarding some of the prior actions chosen:  Actions such as the National Infrastructure Policy and the National Risk Assessment for AML/CFT represent the very beginning of a reform process, so they may have been too far upstream and would demand a high-level of persistent government commitment through multiple subsequent stages to ensure results would be achieved. Having said that, the reform momentum at the time of the design of the operation had been strong enough to warrant this kind of optimism in the design of the operation.  Some of the results indicator’s formulations would have benefited greater specificity and alignment with outcomes. For others, timelines were over ambitious given the time frame of the operation, and more careful wording would have been appropriate. 27. A reform operation this close to election year/time carries risks, as momentum to carry out reforms could be lost. This can be especially true for Pakistan where a caretaker government steps in before elections, affecting both the will and actual time available for the government to push the reforms. While the GoP demonstrated a strong commitment to reforms at the time this operation was being prepared, the proximity to elections did, to an extent, negatively impact the results of this operation. Additionally, the end of the IMF program, the removal of Prime Minister in July 2017 and the subsequent appointment of a new Prime Minister in August 2017; all contributed to the reduced reform momentum. Thus, a combination of the sliding economic conditions, looming elections and change in the senior echelons of government resulted in a markedly slowed down reform momentum. Government Commitment:   28. The FGDPC operation was approved in March of 2017, nine months after the previous CGDPF operation (approved June 2016). In late 2016, as the FGDPC was being prepared, the government seemed in a position to drive reforms up to and through the elections in 2018. However, at the time this operation became effective, reform momentum had already slipped (as explained in paragraph 9), notably around structural issues linked to privatization, import tariff reform and the exchange rate remained overvalued. It should be noted that the government did make some efforts to adjust the exchange rate at time, but in the absence of a policy for a more flexible exchange rate, the impact was limited. As such, Pakistan seemed to have once again slipped into its expansion to contraction pattern. The period of stabilization                                                              9 The CGDPF had a prior action on passing of the SLIC (Reorganization and Conversion) Bill; this action was rolled back. Page 20 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      under the IMF Program and the enthusiasm for reform of the government seemed to be slipping by early 2017. 29. Economic policy-making slowed down, and there was limited broader political ownership of the reform efforts. The Prime Minster was removed from office in July 2017 and the Finance Minister resigned soon after. Fiscal discipline was further relaxed in the budget announced for FY18 and the exchange rate misalignment grew. The IMF EFF program also came to an end in September 2016; thus, the twin deficits began to creep up once more. 30. All the actions under the operation required significant follow-up from the government to achieve the desired results. However, as described above, the changing economic conditions, removal of Prime Minster, change in leadership in the Ministry of Finance and changing priorities in the run-up to the election, meant that the impact of the FGDPC operation was limited. Relevance of risks identified: 31. The FGDPC project document judged the operation to be moderately risky and highlights the following specific risks (rearranged for exposition):  Political (Rated: high)  Macro (Rated: substantial)  Institutional: (Rated: Substantial)  Technical design (Rated: low)  Institutional capacity and sustainability: (Rated Moderate)  Fiduciary: (Rated: substantial) 32. The risk matrix is comprehensive. The global environment (over the course of the operation) remained mostly supportive, there were no severe natural disasters and Pakistan’s security situation improved. However, the political and macro risks did materialize and their rating of them as high and substantial (respectively) were thus appropriate. However, the timing of the operation in the run up to an election, suggests that there should have been more thought on the specific risks involved (i.e. more specific than laid out in the PAD) and why and/or how these could be mitigated. As such, while the identification of the risks was accurate, more mechanisms should have been in place to mitigate those risks that were identified. 33. The combination of political developments, the end of the IMF program and an approaching election resulted in the political and macroeconomic risks materializing and this negatively impacted the operation’s success. An additional factor was the change in the overall political environment at the time. The design of the operation could not be expected to mitigate such events. The operation was designed to mitigate institutional risks through Bank engagements with the agencies responsible for delivering the actions and outcomes. However, as always, the capacity gaps can be large, the institutional rigidities difficult to navigate, with limited space for the capacity building required for follow-through. 34. In conclusion, given the risk assessment in the document, as well as faltering reform momentum (hinted at but not detailed), the political uncertainty and the importance of politics Page 21 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      in the run up to the election (not really flagged), the overall operation risk should have been rated substantial not moderate. 2.2 Monitoring and Evaluation (M&E) Design, Implementation and Utilization   Design:     35. While the focus areas were well chosen and prior actions logical, the intended results could have been better selected. Timelines for the results were often too short for a stand-alone operation, as they did not anticipate the needed follow-on actions. For example, to be effective, the Deposit Protection Act would require underlying rules and regulations to be in place before a Deposit Protection Corporation could be set up, hence the impact on the deposit base could not reasonably be achieved in the timeframe of the operation; having said that, it could be argued that the passing of the law gave depositors some comfort which led to increased deposits. Similarly, while the DTA scheme was approved, it suffered a delay in its launch, and was not operational by the target date. The increase in transaction accounts cannot therefore be directly attributed to it. (More details on design issues are provided in Section 3). However, as has been stated earlier, since there were numerous complimentary TA activities on-going, it was reasonable to assume progress on results could be achieved in the defined timeframes10.   Implementation and Utilization: 36. For many (if not most) of the ten prior actions in the FGDPC, there were follow on actions needed to achieve the desired results. This is not a deficiency in and of itself, and many follow- on actions were part of either on-going TA or on-going investment lending operations. However, the level of ambition expressed in the results was somewhat unrealistic, mainly due to timing. The choice of results for some of the indicators didn’t match the timeline for the operation or for that of the supporting activities (whether TA or IPFs). However, better links between prior actions and results would probably not have materially affected results, given the political and economic developments which affected progress on those results. 2.3 Expected Next Phase/Follow-up Operation 37. Pakistan has embarked on a new IMF EFF program and the World Bank is preparing a two- part DPL series to complement the IMF program: Resilient Institutions for Sustainable Economy (RISE) and Securing Human Investments to Foster Transformation (SHIFT). Financial sector measures feature in the RISE actions, and the impact and lessons learned from this operation will also be relevant. Breaking the recurrent patterns of consumption driven growth that overheats the economy, which often derails the reform momentum in Pakistan (as evidenced in this operation), is at the core of the RISE DPL. 38. The FIIP which became effective shortly after FGDPC in FY17 continues to support some of the key reform areas of the operation. The digital transactions accounts agenda was ramped up through planned investments in the upgradation of the payments systems. The                                                              10 TA activities were ongoing on financial inclusion, long-term finance, AML/CFT, secured transactions, credit information and an IFC TA on infrastructure finance etc. In addition to this, The Bill & Melinda Gates Foundation, USAiD and DFiD also had deep TA engagements on financial sector reform on-going at the time. Page 22 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      Bank has also assisted the SBP in developing a National Payments Systems Strategy which is expected to spur growth in digital finance going forward. The automation of CDNS is also a key component of FIIP. Additionally, FIIP has a significant focus on access to credit for SME’s though the design and implementation of a SME Credit Guarantee Facility. The long-term finance agenda has also been picked up in another IPF (Pakistan Housing Finance Project - P162095). While this project focuses on long-term housing finance, developing capital markets is also part of its development objective. Capital market development is essential to foster long-term finance in any economy. In addition to this, the Bank has commenced analytical work on development and long-term finance in collaboration with SBP, MoF and SECP; this will feed into a reform agenda to unlock this space. 3. ASSESSMENT OF OUTCOMES 3.1 Relevance of Objectives, Design and Implementation (a) Relevance of objectives: Satisfactory 39. The overall objective of the FGDPC was in line with the GoP’s reform agenda and the World Bank’s strategy when the loan was approved and remains so at the time of the ICR. Pakistan will need to address its low savings (and investment) rate to sustain and accelerate growth. The World Bank published a flagship report, Pakistan@100: Shaping the Future in March 2019. The Report articulates the reforms that are necessary for Pakistan to accelerate and sustain growth and boost shared prosperity for all by the time it is 100 years old in 204711. Amongst other things, this will require a focus on financial deepening including access and inclusion, long-term finance and transparency/governance of the sector. (b) Relevance of design: Moderately Satisfactory 40. The FPDPC has relatively well-defined prior actions (i.e. without confusing subordinate clauses) but, as explained earlier, there were weaknesses identified in some of the results indicators. Additionally, two measures: 1) the National Policy on Infrastructure Finance, and 2) improved governance in the insurance sector (of SLIC) seem either tangential or misplaced. The link between developing an Infrastructure Finance Policy and increasing long-term finance lending is not very strong and is not well explained in the PAD. As such, building the pillar on enhancing long-term around the Infrastructure Finance Policy seems incongruous. Additionally, while reform in the insurance sector is very much required in Pakistan, the isolated action on governance reform in SLIC seems misplaced. 3.2 Achievement of Program Development Objectives Pillar 1: Increasing access to finance and enhancing financial inclusion Rating: Moderately Satisfactory                                                              11 https://www.worldbank.org/en/region/sar/publication/pakistan100-shaping-the-future Page 23 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      41. Results indicators for “Increasing access to finance and enhancing financial inclusion” include: (1) increasing the number of transaction accounts, (2) an increased share of NSS profits (interest) distributed through the banking system, (3) an increase in the number of companies registered, and (4) an increase in banking system deposits; with the relevant indicators to have been met by end June 2018. Three of these results were fully achieved, however, this ICR finds that not all of these can be attributed to the Prior Actions. 42. Increasing the number of transaction accounts (segregated by gender). This result was to be achieved through the implementation of an integrated platform for digital transactions (the DTA scheme was to be delivered through the Asaan Mobile Accounts (AMA) scheme). This scheme was envisaged as indispensable to reducing frictions in the digital ecosystem due to its interoperability. While the results indicator was achieved for this action (both the total number of accounts and women’s accounts exceeding targets), this may not be entirely attributable to the prior action. The DTA was approved as the Prior Action, however, the approved scheme was only recently formally implemented (the first pilot was launched in January 2018). As such, the increase in transactional accounts may be more directly attributed to the ongoing technical support the Bank is providing though Trust funds and FIIP. Additionally, elements of the growth may also be organic due to greater private sector investments in the fintech sector. 43. An increased share of NSS profits (interest) distributed through the banking system. This target was partially achieved. However, there was a problem in the structure and accuracy of the results trigger. While the results indicator is a percentage of NSS profits remitted through the banking system, the target is represented as these profits as a percentage of the number of NSS accounts. In addition to this, there is a factual inaccuracy in the target indicator. The target suggests there are 7 million NSS accounts; there are 2.4 million accounts and 7 million investments (each account holder can have multiple investments through different savings certificates). The indicator would have been better designed as the number of account holders (or investments) which have opted for non-cash-based profit distribution as a percentage of total NSS accounts (or investments). With either formulation, this target has been partially met. 44. An increase in the number of companies registered. The new Companies Act supported by the FGDPC synthesizes the fragmentation, streamlines corporate procedures and encourages electronic filing. This in turn increases ease of doing business which should lead to increased formality and creditworthiness of firms. This was a very successful action with the result exceeding the target. 45. An increase in banking system deposits. This was achieved, but there is an issue of attribution. While the Deposit Protection Corporation Act was enacted, the Act needs to be implemented by the Deposit Protection Corporation to be operational. The Corporation was only formally established on June 1, 2018, while the results indicator has been met as of June 30, 2018. Thus, this result may not be directly attributed to the Deposit Protection Corporation, since it was not up and running at the time. However, international experience shows the passing of such a law is a good signal to the market and this may have further contributed to boosting depositor confidence. 46. In sum, there was some progress made under this pillar. The prior actions are mostly appropriate, but results are not all necessarily directly attributable. Page 24 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      Pillar 2: Fostering long-term finance Rating: Moderately Unsatisfactory 47. Increase in the share of long-term credit in the banking system. The results indicator for long-term finance is the share of long term (>5 year) loans to total loans. There were no separate indicators for the National Infrastructure Finance Policy and the SBP regulations on long-term finance. The value of the underlying actions for financial sector development is mixed. The core infrastructure challenge is almost certainly the lack of bankable projects and lack of long- term financing (asset mismatch). While the FSAP recommended the development of a National Infrastructure Policy, there appears to have been limited buy-in of it within the government. The SBP’s issuance of improved and clarified regulations for long-term lending could be an important financial sector reform as data on sources and uses of funds would improve the ability to identify and address maturity mismatches. However, during implementation, the team found it difficult to obtain information on outcomes, suggesting data may not have improved significantly. The results target was partially met with 8.9 percent of loans being long-term versus the targeted 10 percent (short by 1.1 percent); however, the baseline was 8.8 percent in 2015, therefore this was a very marginal improvement over three years. However, Project Finance for the energy sector and Public-Private Partnerships have been on the rise, demonstrating that long-term finance has been mobilized to an extent. The Infrastructure Policy and Prudential Regulations may have contributed to this as a signal of the government’s commitment to infrastructure development in Pakistan. Pillar 3: Enhancing Transparency of the Financial Sector Rating: Unsatisfactory 48. The results indicators for Pillar 3, Enhancing Transparency of the Financial Sector include: 1) an adjudicating body for Benami transactions, 2) remaining in compliance with FATF Recommendation 1, 3) an increase in the share of registered prize bonds, and 4) that the CEO and Chairman of SLIC have passed a fit and proper test. These should have been achieved by June 30 2018. None of these targets were fully achieved by the target date. 49. An Adjudicating Body for Benami transactions be in place. While the Benami Law was enacted as the Prior Action, the Adjudicating Body was not appointed by the target date. The establishment of an Adjudicating Body for Benami accounts could only occur after operational rules and regulations underpinning the Law were established (these Rules were put in place in March 2019). The Benami system is deeply entrenched in Pakistan and the passage of this law was a very significant and far-reaching action. While there was a delay in implementation of the law, the Rules that were eventually enacted have further deepened the impact of the legislation on the financial sector. While the original Law envisaged criminalizing only Benami transactions in property, the Rules recently enforced have broadened the scope of the law to cover Benami bank accounts. The SBP has recently been investigating the churning of large amounts of money (by some estimates up to PKK 200 billion) through fictitious bank accounts (opened in the names of unaware third parties). By criminalizing the use of these Benami bank accounts, the Law has further deepened the controls for AML. Page 25 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      50. Pakistan remains in compliance with FATF Recommendation 1. Pakistan’s compliance with the FATF is important for the operation of its banking system especially as it connects to the rest of the world. The completion of the National Risk Assessment (NRA) is the first step in establishing FATF compliance, and no country undergoing a Mutual Evaluation can do without it. There was an error in the formulation of the results indicator for the completion of the NRA for AML/CFT. The PAD states that “completion of the NRA will help Pakistan to achieve compliance with FATF Recommendation-1” and as such, the target result is that Pakistan remains compliant with FATF Recommendation-1. Only a Mutual Evaluation can determine if a country is complaint with FATF Recommendations. Pakistan’s Mutual Evaluation was completed in October 2019, as such, we could confirm the status of this results indictor by the target date. As the Mutual Evaluation was always planned to take place after June 2018, this indicator was incorrectly chosen. Pakistan was placed on the FATF Grey List in June 2018, thus, at the time there were deemed to be gaps in Pakistan’ systems and controls for mitigating AML/CFT risks. Pakistan’s Mutual Evaluation was completed in October 2019 and confirmed that Pakistan remains on the Grey List, which would indicate it is not fully complaint with FATF Recommendation 1. 51. An increase in the share of registered prize bonds. The target was that 2 percent of all outstanding prize bonds would be registered and this was partially met (0.7 percent as at June 2018). Formalizing/registering prize bonds (bearer instruments), i.e. requiring KYC procedures for denominations over 40,000 PKR (around 250 USD) was expected to reduce their use for money laundering. However, this action does not make it mandatory to register these bonds, it gives the option to register; the impact therefore is limited. The prize bond indicator is appropriate. Moving from 0 percent registered bonds to 0.7 percent registered bonds in a couple of years is reasonable outcome given overall prize bonds outstanding represent 20 percent of currency in circulation. 52. Since February 2019, the CDNS has discontinued the issuance of Prize Bonds with a donation of PKR 40,000 and above, thus there does not seem to be a long-lasting impact of this particular action. On a positive note, the government has recognized the risks of unregistered bearer instruments in the economy and has commenced a program to gradually register all prize bonds currently in circulation. The RISE DPL currently under preparation is also reinforcing this action. 53. The CEO and Chairman of SLIC have passed a fit and proper test. SLIC is the dominant player in Pakistan’s life insurance market but poses risks and prevents development of the sector since it remains uncompetitive. Amendments to the SLIC Act had been proposed in the previous DPL (CGDPF) to reduce its monopoly hold on the sector and to instill better corporate governance practices. The action was rolled back but this slightly watered-down action was included in FGDPC to demonstrate the importance of this reform. It was believed that this action would be a more realistic way to start the reform process at SLIC. Unfortunately, once again, there was very little traction on this agenda and the results target was not met. The government has placed SLIC on the national privatization list in 2019, so this may open the space for reform; this is thus a positive development for the sector. 54. In sum, for this Pillar, the Benami Law was a very significant action. The completion of the NRA was important for AML/CFT but the target result was misaligned. It should be noted that recent developments on SLIC have been encouraging; this may have been the result of the messaging and policy dialogue in this space. Page 26 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      a. Efficiency N/A   b. Justification of Overall Outcome Rating   Rating: Moderately Unsatisfactory 55. The FGDPC operation was relevant in that most prior actions were in areas that would, i successful, improve access to, deepen and enhance transparency of Pakistan’s financial system The ongoing complementary TA work and the reform momentum in the run-up to the FGDPC made this operation part of a package of support on Pakistan’s financial sector. The robust TA and lending program that was designed to support the implementation of these action continues till date. The limited follow through on some of the actions within the timeframe o the operation stemmed more from the political economy at the time than with the design of the operation. This operation had numerous stakeholders to drive the reforms (SBP, CDNS, SLIC FBR etc.); however, MoF was the key counterpart. The slipping economic conditions and the changing political environment resulted in a significant slow-down in the momentum fo reform. 56. Pillar 1 had several relevant actions and they achieved most of their results. However, in several cases, the direct link between the action and results indicator did not exist or wa ambiguous. Pillar 2’s focus on the Infrastructure Finance Policy represented an early stage o reform in this area and yielded limited impact since there is no evidence of the Policy being used a strategic tool by the government. The SBP measures to provide information on maturity and possible mismatches would be important but it is unclear how these have worked in practice. Pillar 3 focused on significant governance problems in Pakistan’s financial sector However, the admirable reform ambition was impacted by the political and economic environment. It must be noted, however, that policy dialogue in this space has once again picked up in the last year. 57. The combination of relevance (Moderately Satisfactory), Pillar 1 (Moderately Unsatisfactory) Pillar 2 (Moderately Unsatisfactory) and Pillar 3 (Unsatisfactory) gives an overall rating o Moderately Unsatisfactory. c. Overarching Themes, Other Outcomes and Impacts (a) Poverty Impacts, Gender Aspects, and Social Development 58. The FGDPC was focused on Pakistan’s financial sector and more specifically on its low sa limited financial intermediation. Moving the needle on these even slightly could help Pakistan the fiscal resources needed for poverty reduction. Page 27 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      59. The actions targeting inclusion are especially important for poverty, gender and social development. Lack of financial inclusion restricts the availability of domestic savings. According to FinDex 2017 (World Bank, 2017), only 21 percent of adults in Pakistan have bank accounts, up from 13 percent in 2014. This shows relatively little progress since 2014 and puts Pakistan behind most of its neighbors. Moreover, this increase in account ownership has not benefited all groups equally. While accounts held by women increased by 100 percent between 2016 and 2018 and rising from 14 percent of all accounts to 26 percent, the gender gap between account ownership is almost 30 percentage points. However, this does not mean that adults in Pakistan do not save at all. As the FinDex report notes, Pakistan is among the few developing economies where 20 percent of adults cited savings as the main source of funds, but only 1 in 10 reported having saved in a financial institution, with the remainder saved in non-formal ways. Thus, increasing digital services, creating security for account holders (deposit protection) and improved linkages from NSS to the banking system should support increased inclusion.   (b) Institutional Change/Strengthening There was no marked institutional change/strengthening as a result of this operation (c) Other Unintended Outcomes and Impacts (positive or negative, if any)  No unintended outcomes were observed (d) Summary of Findings of Beneficiary Survey and/or Stakeholder Workshops There was no beneficiary survey or stakeholder workshop 4. ASSESSMENT OF RISK TO DEVELOPMENT OUTCOME Rating: Substantial 60. Progress on improving financial access and facilitating financial inclusion will almost certainly continue given the development needs in Pakistan. There is once again, political appetite for reform, and the previous reform agenda (although unfinished) provides a strong foundation to build on. For example, the NFIS targets have recently been made more ambitious and there are increasing efforts to find digital solutions to foster more inclusion. The automation and formalization of NSS has become ever more critical. The Deposit Insurance Corporation is now up and running so while it did not meet the operation’s target date, the work has continued. 61. There is some progress on the removal of constraints to long-term finance. However, besides targeting supply side issues to encourage banks to lend long term, there is need to ramp up reform on the demand side. Banks cite issues of bankability and profitability of infrastructure finance proposals. Unless the challenges faced are approached holistically the reform agenda may lag. The new government recognizes the need for long-term finance to spur growth in the economy and is engaging with the Bank to help unlock this space in Pakistan. Capital market development is a key priority for the government going forward and the WBG is actively engaged in building a program of support in this space. 62. In terms of improving transparency of the financial sector, while progress was limited by the target date, at the time of this ICR, we see progress in three of the four actions. Before the Adjudicating Body for the Benami Law could be established, the underlying Rules and Page 28 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      Regulations of the Law had to be put in place; this was done in March 2019. To establish if Pakistan remained in compliance with Recommendation 1 of FATF, the Mutual Assessment of the systems and controls around AML/CTF had to be completed; this Assessment has been completed. For Prize Bonds, the new government, recognizing the AML risks inherent in the unregistered instrument, discontinued the assurance of the PKR 40, 000 domination bond in February 2019. In addition to this, the new government has commenced a program to gradually register all outstanding prize bonds to help abate the AML risks The SLIC action, which floundered in CGDPF also, now has some traction as the new government has placed SLIC on the privatization list. 5. ASSESSMENT OF BANK AND BORROWER PERFORMANCE d. Bank Performance Bank Performance in Ensuring Quality at Entry Rating: Moderately Satisfactory 63. Pakistan’s low savings/investment rate is, along with fiscal crowding out of private sector credit, linked to limited financial access/inclusion coupled with a lack of long-term finance and weaknesses in the sectors overall transparency. Thus, improvements in these areas were in line with the government’s (previous and current) and WBG priorities. The FSAP recommendations, ongoing TA work along with a diversified financial sector lending program on financial inclusion and housing finance, justified an operation specific to this sector. The access/inclusion focus (and to a lesser extent actions) in Pillar 1 and especially the governance focus (and actions) in Pillar 3 would have advanced reform and, over time, outcomes in Pakistan’s financial sector. As such, the reform areas identified were relevant and timely. 64. The FGDPC was designed as a standalone operation (2nd in a row), linked to the previous operation through a focus on the financial sector, although in the case of the FGDPC, the focus was entirely on the financial sector, whereas CGDPF was broader. This decision for a standalone operation was based on the strong complementary lending TA program in the financial sector and the proximity to elections. The breadth and depth of the ongoing TA work (by WBG and other donors) set the stage for the set of policy reforms in the FGDPC. A weakness noted in the design of the operation was the seemingly limited attribution between the actions and results, and lengthy timeline and chain of intermediate steps to achieve results. This risk was meant to be countered with the lending and TA work which was designed to support implementation in these areas. An additional complication was that the operation was set to deliver reforms (and results) just prior to elections which ran the risk of government attention being diverted. This could have been supported by a better mitigation discussion in the operation’s design. e. Quality of Supervision Rating: Moderately Satisfactory   Page 29 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      65. Once the Prime Minister stepped down and the Minister of Finance effectively left office, progress lagged. As the Bank had an ongoing support program in the financial sector, some work continued at the operational level. In particular, the recent resumption of the reform momentum in these areas demonstrates that technical dialogue was sustained by the task teams. 66. The previous operation (CGDPF) had an effective monitoring matrix that tracked actions and follow-ons (if needed) and the use of this tool may have also helped FGDPC in the supervision process. c. Justification of Rating for Overall Bank Performance Rating: Moderately Satisfactory   67. The overall objective of the FGDPC was in line with the GoP’s reform agenda and the World Bank’s strategy when the loan was approved and remains so at the time of the ICR. Pakistan will need to address its low savings (and investment) rate to sustain growth. This cannot be achieved without more meaningful intermediation by the financial sector. 68. The FGDPC design built upon the reform agenda from previous DPL operations and was also designed to complement existing and proposed financial sector engagements. The FGDPC was conceived at a time when the Bank had an extensive technical assistance program on Pakistan’s financial sector. With financial intermediation in all sub-sectors of the financial sector much lower than peer countries, WBG teams deployed several operations using a variety of instruments to support the development of Pakistan’s financial sector (between FY15-FY18). 69. Admittedly, it was not possible to anticipate in any meaningful way the outcomes of the changing political conditions; these, along with an ending IMF program and looming elections, compounded the slowing reform momentum. The ongoing TA program was a key part of supervision; as such, the design of the project cannot be faulted for the slowdown in the reform momentum, but deficiencies in the selection of some results indicators were noted, hence the moderately satisfactory rating.  Borrower Performance: Government Performance Rating: Moderately Unsatisfactory 70. The FGDPC operation was approved in March of 2017, nine months after the previous CGDPF operation (approved June 2016). In early 2017, as the FGDPC was being prepared, the government seemed in a position to drive reforms up to and through the elections in 2018. However, at the time this operation became effective, reform momentum had begun to slip (as explained in paragraph 9), notably around structural issues linked to privatization, tariff reform and adjustments to the overvalued exchange rate. Fiscal discipline started slipping after the end of IMF program and the exchange rate, already overvalued, did not adjust in line with the Page 30 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      changing economic conditions12. By mid-2017, election mode had set in; the government’s FY18 budget reduced income tax thresholds, increased fiscal exemptions, increased trade tariffs and kept the exchange rate overvalued. The period of stabilization under the IMF Program and the reform momentum of the government seemed to be slipping soon after the FGDPC was approved (early 2017). 71. Economic policy-making slowed down, and there was limited broader political ownership of the reform efforts. The Prime Minster was removed from office in July 2017 and the Finance Minister resigned soon after. A new Prime Minister and an Adviser for to the Ministry of Finance were appointed in August 2017 but the political imperatives were very different by this time. Elections were approaching and as a result, fiscal discipline was further relaxed in the new budget announced for FY18. 72. If not for the unprecedented events of the changing political environment, and based on the government’s track record for reform, the operation could have seen better results. The timing of the FGDPC was unfortunate in that results had to be achieved in a time of a slowdown in reform momentum. Having said that, greater commitment across the implementing agencies and various layers of the government should have helped ensure that reforms were not significantly derailed, but unfortunately this did not happen in practice. 6. LESSONS LEARNED   While the FGDPC focused on an important policy area for Pakistan; deepening the financi sector’s intermediation role is imperative for sustained and inclusive growth in Pakistan, th stand-alone nature of the operation created several problems. The key lessons learnt from the operation are as below:    The design of the results indicators, the theory of change and attribution should have been brought out more, explained better and measured more robustly.  Some actions required intermediate steps to achieve the target results. More attention was needed on how to draw out clearly the sequence of actions required to deliver results. These should have been better spelled out in the PAD and agreed with the government.  Undertaking a DPC so close to election year should be avoided given that the governments focus is very likely to be diverted close to the election.  It is not enough to identity and rate risks effectively; mitigation steps need to be incorporated at the design stage.                                                                   As stated earlier, the government did make some efforts to align the exchange rate better at the time but in the 12 absence of a more flexible exchange rate policy, the impact was limited.   Page 31 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      7. COMMENTS ON ISSUES RAISED BY BORROWER/IMPLEMENTING AGENCIES/PARTNERS (a) Borrower/Implementing agencies N/A (b) Co-financiers N/A (c) Other partners and stakeholders N/A                                         Page 32 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      Annex 1: Financial Sector Prior Actions from FISG series and CGDPF FSIG I The Ministry of Finance has submitted the Credit Bureau Bill, 2014 to the National Assembly for Approval The Securities and Exchange Commission of Pakistan has approved the Securities and Exchange Commission (Micro-insurance) Rules, 2014 FSIG II The National Assembly has approved the Credit Bureau Act CGDPF The National Assembly has passed the Financial Institutions (Secured Transactions) Bill The National Assembly has passed the amendments to the Credit Bureau Act The National Assembly has passed the amendments to Securities And Exchange Commission Act The Securities and Exchange Commission has issued an order for the integration of the three stock exchanges. The National Assembly has passed the Financial Institutions (Recovery of Finances Amendment) Bill The National Assembly has passed the State Life Insurance Corporation (Re-organization and Conversion) Bill                                   Page 33 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      Annex 2: Bank Lending and Implementation Support/Supervision Processes   Task Team Members Name Unit     Namoos Zaheer GFCSN     Khalid Bin Anjum GGOPZ     Akram El-Shorbagi GGOAP     Aza A. Rashid GFCSS   Connor P. Spreng GFCSN     Enrique Armas GMTSA     Gabi Afram GFCAE     Muhammad Waheed GMTSA     Sarmad Ahmed Shaikh GFCSN     Sarwat Aftab   GFCSN           Year Labor Travel Other Total 2017 94,397.99 18,408.96 10,857.57 123,664.52 2018 51,195.75 12,924.17 7,611.72 71,731.64 2019 48,221.64 1,337.13 15,037.99 64,596.76 Grand Total 193,815.38 32,670.26 33,507.28 259,992.92                 Page 34 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      Annex 3: Summary Of Borrower's ICR and/or Comments On Draft ICR (if any) Page 35 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      Annex 4: List of Supporting Documents 1. Finding the Path to Job-Enhancing Growth: A Country Economic Memorandum, Report No 75521-PK, World Bank, 2013. 2. Article IV Consultation and Request for an Extended Arrangement under the Extended Fund Facility, IMF Country Report 13/287, September 2013. 3. Pakistan First Fiscally Sustainable and Inclusive Growth (FSIG 1) Development Policy Credit, Program Document, Report No. 86373-PK, April 3, 2014. 4. Pakistan, Country Partnership Strategy for the period 2015-2019, Report No. 84645-PK, April 4, 2014. 5. Pakistan Second Fiscally Sustainable and Inclusive Growth (FSIG 2) Development Policy Credit, Program Document, Report No. 99376-PK, May 15, 2015. 6. Competitiveness and Growth Development Policy Financing, Program Document, Report No. 105825-PK, May 23, 2016 – includes Letter of Development Policy. 7. Finance for Growth and Development Policy Credit, Program Document, Report No. 112795-PK), February 6, 2017. 8. Finance for Growth Development Policy Credit, Report No. 112795-PK, February 14, 2017. 9. Performance and Learning Review for the Islamic Republic of Pakistan, Report No. 113574, May 18, 2017. 10. Pakistan 2017, Article IV Consultation, IMF Country Report 17/212, May 2017. 11. Pakistan Financial Inclusion and Infrastructure Project, Project Appraisal Document (PAD), Report No. PAD2012, May 15, 2017. 12. Pakistan Development Module FSAP, Aide-Memoire (April 2016) 13. Pakistan Development Module FSAP: Infrastructure Finance Technical Note (2016) 14. Implementation Completion and Results Report for Fiscally Sustainable and Inclusive Growth Development Policy Credit, Report No. ICR00003946, June 15, 2017. 15. Pakistan Development Update, November 2017. 16. Pakistan, First Post Program Monitoring Discussions, IMF Country Report 18/78, March 2018. 17. World Bank notes on Pakistan’s Economy (Oct 2018) 18. Implementation Completion and Results Report for Competitiveness and Growth Development Policy Financing, December 10, 2018. 19. Pakistan Financial Inclusion and Infrastructure Project, ISR, December 21, 2018. 20. Pakistan Ministry of Finance Note on State of Pakistan’s Economy (January 2019) 21. Pakistan@100: Shaping the Future (March 2019) Page 36 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      Annex 5: Key Economic Priorities of the Government of Pakistan The government envisages stabilizing the economy, bringing inflation down to the 6–7 percent range, and achieving growth rate targets of 6–7 percent by 2017/18 or earlier. To do this, it has set the following goals and comprehensive policy agenda: Stabilization Moving to fiscal consolidation. Reducing the fiscal deficit from 8.3 percent of GDP in 2012/13 to 3.5-4 percent in 2016/17 by increasing revenues by around 3 percent of GDP, eliminating tax exemptions; imposing austerity in expenditure management, cutting down subsidy outlays; protecting the priority safety net (BISP); and carrying on active public debt management. Rebuilding the external position to no less than 3 months of imports and tightening monetary policy. Scaling back monetary accommodation of fiscal deficits and setting up policy rates to keep positive real interest rates; strengthening the central bank’s independence; and protecting the external position by repurchasing reserves to cushion against major shocks. Main growth-enhancing reforms Comprehensive power sector reform. Reducing power subsidies; restructuring boards of power distribution and generation companies; making new investments; strengthening the power sector regulator; and expanding alternative sources of energy. Reforming or privatizing SOEs. Privatizing by equity or strategic sales; or if restructuring, then requiring professional chief executives and board members and their compliance with Public Sector Companies (Corporate Governance) Rules 2013. Improving trade competitiveness. Simplifying tariffs, with four slabs and 1–25 percent rates, and phasing out trade-distortive statutory regulatory orders (SROs) on some 4,000 products. Expanding trade relations with neighbors. Facilitate regional trade and take full advantage of trade preferences available from the European Union. Enhancing the investment climate. Establishing a One Stop Shop for registering limited liability companies; and strengthening of the BOI in implementing a plan for improving the business environment and investment-friendly special economic zones. Expanding access to finance. Developing the SBP’s Financial Inclusion Program to enhance access of SMEs to financial services through regulatory reforms, product innovation, financial literacy, and consumer protection. Source: ICR, FSIG DPC-1, P147557 Page 37 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      Annex 6: Analytical Underpinnings Prior Actions Analytic Underpinnings Pillar 1: Improving access to finance and enhancing financial inclusion The NFIS Council has approved the Digital Transaction  National Financial Inclusion Accounts (DTA) Scheme. Strategy (NFIS)  Financial Sector Assessment Program FSAP 2016  Debt Capital Markets Technical Note (TN) The SBP has granted clearinghouse membership of the  NFIS National Institutional Facilitation Technologies (NIFT) to  FSAP 2016 the Central Directorate of National Savings (CDNS) to allow  Debt Capital Markets Technical for distribution of NSS profits through bank accounts. Note (TN) The National Assembly has approved the new Companies  Accounting & Auditing Report on Bill to modernize the regulatory framework for companies Observance of Standards and Codes (ROSC)  Business Registration Diagnostic  Doing Business Surveys The Deposit Protection Corporation Act 2016 has been  FSAP 2010 approved by Parliament.  IMF Technical Assistance (TA) Pillar II: Fostering Long-term finance The ECC has approved the National Policy on Infrastructure  FSAP 2016 Finance The SBP has issued Prudential Regulations for long-term  Infrastructure Finance Technical finance (in line with Basel III requirements) Note Pillar III: Enhancing the Transparency of the Financial Sector The Benami Transaction Prohibition Bill has been approved  IMF TA by Parliament. The Ministry of Finance has completed the National Risk  AML/CFT Assessment Assessment (NRA) for Anti-Money Laundering and  WBG TA Combatting Financing of Terrorism (AML/CFT). The Cabinet has approved the rules for a new registered  NFIS prize bonds scheme with denomination of PKR 40,000 and  FSAP 2016 above The Ministry of Commerce has endorsed the Corporate  FSAP 2016 Governance Assessment for SLIC to monitor compliance  Insurance TN (NFIS) with the Public Sector Companies (Corporate Governance) Rules 2013. Page 38 of 39   The World Bank      Finance for Growth Development Policy Financing (P161136)      Annex 7: Letter from Ministry of Finance (non -public results targets) Page 39 of 39