World Bank is considering a restructuring of its $213 million “Integrated Flood Resilience and Adaptation Project (IFRAP)” to expedite the disbursement of funds designated for resilient housing reconstruction and restoration efforts in Pakistan.
Documents indicate that IFRAP, launched on July 3, 2023, aims to revitalize the livelihoods of communities impacted by the catastrophic floods of 2022 and enhance their capacity to cope with future extreme weather events. To date, the project has disbursed approximately $22.38 million, with a closing date set for December 31, 2028.
The project focuses on the restoration of vital services such as housing, water, sanitation, and hygiene (WASH), transportation, agriculture, and irrigation. Additionally, it aims to lay the groundwork for long-term flood resilience by strengthening institutional frameworks and information systems.
IFRAP encompasses six key components, including a Contingent Emergency Response element designed to address flood damage rehabilitation, primarily in the province of Balochistan. The Ministry of Planning Development and Special Initiatives (MoPDSI) oversees project implementation, with a Federal Project Management Unit (FPMU) established in Islamabad, although most activities are concentrated in Balochistan.
To facilitate effective project execution, the proposed restructuring includes modifications to the withdrawal categories in Section III of the Second Schedule to the Financing Agreement and revisions to the Disbursement and Financing Instruction Letter (DFIL). These adjustments would allow for the creation of a designated account specifically for Housing Reconstruction Unit (HRU) activities.
Incorporating the HRU into the IFRAP framework will require certain adjustments, such as the establishment of a separate designated account. This change entails generating distinct Interim Un-Audited Financial Reports (IUFR) and annual financial statements.
A dedicated Financial Management System (FMS) will be necessary to oversee the HRU’s financial management functions. This system will enable the HRU to sign off on transactions, access client connections for report submissions, and manage expenditure documentation. Additionally, a project-wide internal audit firm will oversee the HRU’s financial activities, while the Office of the Auditor General will conduct statutory audits.
An implementation unit, the Housing Reconstruction Unit (HRU), has been set up in Quetta as an extension of the FPMU, focusing on the housing reconstruction and restoration component. The HRU will oversee the performance of its implementing partners, who are currently being finalized for selection.
The HRU will receive Damage Assessment and Verification (DAV) data from its partners and will conduct spot checks, ensuring accurate data collection for technical inspections required for disbursing housing reconstruction subsidy grants. The HRU is also set to establish centralized bank accounts at commercial banks of the beneficiaries’ choosing, allowing for direct transfers of housing reconstruction grants without intermediaries.
To effectively manage the financial operations under this component, a clear financial management framework is essential to maintain separate and accurate records of housing subsidy transactions, which are expected to exceed half a million individual transactions.
Currently, the DFIL limits the establishment of a dedicated account for the HRU, requiring all disbursements to flow through the FPMU, which may cause delays and inefficiencies due to the centralized nature of this financial management approach.
By modifying the withdrawal categories and updating the DFIL, the HRU would gain direct access to funding, leading to a more efficient and responsive financial management system. This change would allow the HRU to operate with greater autonomy, enabling a quicker response to the project’s demands and ultimately enhancing the effectiveness of its implementation. The proposed adjustments will align the financial management framework more closely with the operational structure, as the HRU is specifically tasked with the responsibilities outlined in Part 3 of the project.
