November 16, 2001	Friday	Shaba'an 29, 1422

ISLAMABAD, Nov 15: World Bank has forecast less than 3 per cent GDP growth rate for Pakistan during the current financial year.

“The foremost important thing today is to implement strong reform programme which is very much homegrown and can resolve major economic issues,” said the Vice President of the World Bank for South Asian Region, Ms Mieko Nishimizu.

Talking to reporters here on Thursday at the residence of World Bank’s Resident Representative John Wall, she said Pakistan has to show strong performance to qualify for the remaining 300 million dollar World Bank support announced for 2001-2002.

Earlier, 300 million dollar were offered under International Development Agency (IDA) concessional lending as part of the overall 600 million dollar funding programme for Pakistan during the current financial year.

She said that the World Bank has worked out three years Country Assistance Strategy for Pakistan. “And we hope to extend funding for Pakistan under Poverty Reduction Support Credit,” Ms. Mieko said without giving any idea about the size of the proposed funding.

She agreed that Pakistan’s economic situation has worsened following September 11 events, and said that there has been a “negative impact of substantial magnitude.”

The World Bank vice president urged the government to improve governance and remove corruption in order to lessen the negative impact of September 11 events on the economy. “You ought to implement structural reforms, generate more employment and stabilize balance of payment position more quickly.”

She was reminded that Pakistan was already experiencing cut in exports and other problems arising out of September 11 attack on America and under these circumstances how should it improve the economy in the absence of increased foreign funding. “The medicine is the same but you have to go for more doses.”

She explained that the country needed to generate more resources by restructuring the Central Board of Revenue. She also advised that Pakistan should tighten its belt and ensure that there was no reduction in social sector spending. Without talking about the defence budget, she said that more rooms should be found out for expenditure cut to meet the present tough economic situation.

Responding to a question, she said that there was no investment because of the harassment factor and that the government should make sure that tax collectors did not harass and create problems for the investors and the businessmen. One of the main reasons for low investment was that CBR suppressed the investors and tax payers, she said. “Pakistan is presently a risker place for foreign investment.”

“CBR has to be reformed and it has to be made a good organization”, she said adding that she was happy to note that CBR officials were now trying to implement various recommendations including that of the Tax Committee headed by Shahid Hussain to generate more resources and remove leakages. “But these reforms need to be implemented quickly.”

Ms Mieko said that without making the CBR an efficient organization, there was no hope to have increased funds for poverty reduction, education and health. If faster growth was required, she said, there have to be fundamental improvements in the CBR and that it will have to be made a modern tax service agency. “I cannot imagine Pakistan having a bright future without reforms in the CBR,” she believed. There are not many options for Pakistan to improve its economy.

She told a reporter that bringing about any change whether it was in the CBR, police, audit and account offices was a tough task.

Ms Mieko appreciated the performance of the banking system and said that there were no more instances of powerful people taking loans and not paying them. Pakistan’s banking system, she pointed out, was about to collapse but today it was moving faster to become a modern system. “I can say that today banking system in Pakistan is much cleaner than ever before”, she added.

She said she was also happy to observe this time that there was no more ghost schools and ghost teachers as such schools and teachers had successfully been wiped out.

To another question she repeatedly said debt burden of Pakistan has to be taken seriously by the people and the government. “It all depends whether you get certain debt relief”, she said adding that Pakistan will have to increase its exports, and improve its balance of payment position to considerably enhance its overall resources.

In reply to a question the Resident Representative of World Bank John Wall said that the issue of debt burden or debt write-off was not discussed with the government during Ms. Mieko’s meetings with senior government officials.

Ms Mieko said that Pakistan was a blended country to have both IDA and IBRD lending but mainly it was being offered IDA, which was a very much concessional window. She said that she did not get the impression that the government was looking for any debt forgiveness. She stressed the need for prudent borrowing by Pakistan.

Ms. Mieko also called upon the government to improve its delivery services to raise the level of education and ensuring more funds for health purposes.

She told a reporter that budget deficit targets could not be met without making the CBR an efficient organization.