World Bank’s $213 Million Project for Flood Victims in Pakistan Likely to Be Restructured

The World Bank’s “Integrated Flood Resilience and Adaptation Project (IFRAP)” worth $213 million is on the brink of restructuring. This move aims to expedite the disbursement of funds allocated for resilient housing reconstruction and restoration for communities impacted by the devastating 2022 floods.

Overview of the IFRAP Project

Initial Goals and Current Progress

The IFRAP was signed on July 3, 2023, with a mission to rejuvenate and enhance the livelihoods of flood-affected communities. The project also aims to bolster their adaptive capacity to future extreme flooding events. To date, $22.38 million has been disbursed, with the project set to conclude on December 31, 2028.

Focus Areas of the Project

The project is comprehensive, focusing on:

• Housing
• Water, Sanitation, and Hygiene (WASH)
• Transport
• Agriculture
• Irrigation

Additionally, it aims to build long-term flood resilience by strengthening institutions and information systems.

Project Components

Component Breakdown

The project consists of six major components, including a Contingent Emergency Response component aimed at rehabilitation and resilience, primarily in Balochistan. The Ministry of Planning Development and Special Initiatives (MoPDSI) is the project’s implementing entity, with a Federal Project Management Unit (FPMU) based in Islamabad. Most implementations are set to occur in Balochistan.

Establishment of Housing Reconstruction Unit (HRU)

To ensure efficient implementation, a dedicated Housing Reconstruction Unit (HRU) has been established in Quetta. This unit is an extension of the FPMU, responsible for managing and monitoring the performance of implementing partners, who are currently being finalized.

Proposed Restructuring

Changes in Withdrawal Categories and DFIL

The restructuring proposes changes to the withdrawal categories in Section III of the Second Schedule to the Financing Agreement and revisions in the Disbursement and Financing Instruction Letter (DFIL). This would allow the opening of a designated account for Category 4 activities related to the HRU.

Financial Management Adjustments

The inclusion of the HRU necessitates several changes:

• Separate Designated Account: Opening a separate account for HRU activities.
• Financial Statements: Production of separate Interim Unaudited Financial Reports (IUFR) and annual financial statements.
• Dedicated Financial Management System (FMS): Overseeing HRU’s financial functions and ensuring proper documentation and reporting of expenditures.

Audit Requirements

• Internal Audit: Performed by a project-wide internal audit firm.
• Statutory Audit: Conducted by the Office of the Auditor General.

Implementation and Monitoring

HRU Responsibilities

The HRU will manage and monitor the implementation partners. It will receive Damage Assessment and Verification (DAV) data, perform spot checks, and monitor data collection for housing reconstruction subsidy grants. The HRU will open centralized bank accounts in commercial banks to directly transfer grants to beneficiaries, ensuring no third-party involvement.

Ring-Fencing Financial Management

Given the potential volume of transactions (over half a million), financial management under this component needs to maintain separate and clean records of housing subsidies.

Streamlining Fund Disbursement

Current Limitations

The current DFIL restricts opening a separate designated account for the HRU, causing all disbursements to go through the FPMU. This centralized approach can lead to inefficiencies and delays.

Proposed Amendments

Amending the withdrawal categories and revising the DFIL would grant the HRU direct access to funds, streamlining the financial management system and enabling more responsive operations. This alignment would enhance the overall effectiveness and efficiency of Part 3 of the project.

Conclusion

The restructuring of the World Bank’s IFRAP project is a crucial step toward ensuring efficient and timely aid to Pakistan’s flood victims. By modifying the financial management structure, the project aims to better align with its operational needs, thereby enhancing resilience and recovery efforts for affected communities.

FAQs

1. What is the IFRAP project?

The Integrated Flood Resilience and Adaptation Project (IFRAP) is a $213 million initiative by the World Bank aimed at rebuilding and enhancing the livelihoods of communities affected by the 2022 floods in Pakistan. It focuses on resilient housing reconstruction, WASH, transport, agriculture, and irrigation.

2. Why is the IFRAP project being restructured?

The restructuring aims to facilitate quicker disbursement of funds for housing reconstruction and restoration by allowing direct access to funds through a dedicated Housing Reconstruction Unit (HRU). This change is intended to enhance the project’s efficiency and effectiveness.

3. What changes are proposed in the restructuring?

The proposed changes include revising the withdrawal categories and the Disbursement and Financing Instruction Letter (DFIL) to open a designated account for the HRU. This would streamline financial management and ensure timely fund disbursement.

4. What is the role of the Housing Reconstruction Unit (HRU)?

The HRU, based in Quetta, is responsible for managing and monitoring the performance of implementing partners, conducting damage assessments, and overseeing the disbursement of housing reconstruction grants directly to beneficiaries’ bank accounts.

5. How will the restructuring impact the project’s implementation?

The restructuring will enable more autonomous and responsive financial management by the HRU, reducing delays and inefficiencies associated with centralized fund disbursement. This will likely improve the overall effectiveness of the project in aiding flood-affected communities.

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