January 9, 2002	Wednesday	Shawwal 24, 1422

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ISLAMABAD, Jan 8: The widespread poverty in Pakistan is due to the failure of governance, believes country director of the Asian Development Bank, M. Ali Shah.

In his detailed presentation at the National Defence College on Monday, he said that the major causes of poverty in Pakistan include (i) lack of employment opportunities, which in the rural setting is caused by the absence of rural-urban linkages; (ii) a slowdown in the pace of economic growth in the 1990s; and (iii) with the burgeoning debt obligations, a decline in the public sector development programme.

He said the ADB’s poverty analysis, undertaken during 2000 as part of its poverty Reduction Strategy in Pakistan, indicates that the ADB’s poverty analysis and approaches to poverty reduction in Pakistan were discussed at the high-level forum on Poverty Reduction on April 23, 2001. The forum generally supported the findings of ADB’s poverty analysis, including the causes, trends, and severity of poverty in Pakistan; the development priorities needed to reduce poverty; and the policy and institutional constraints to poverty reduction.

Priorities that emerged from the poverty analysis and forum included (i) the need to achieve broad-based growth through development of small and medium enterprises (SMEs) and promotion of exports of higher value added agricultural products; (ii) promotion of physical assets for the poor through support of micro credit and poverty reduction programmes; (iii) social asset creation, including social sector programmes for education and health; (iv) social safety nets with targeted programmes for excluded groups; and (v) improved governance that covers judiciary reforms and public sector efficiency.

He said that Pakistan faces daunting governance challenges. Analyses of linkages between poverty and governance highlight five issues of priority concern; (i) poor fiscal performance, including management of eternal and domestic debt, and budget planning and expenditure for pro-poor investments; (ii) political and social exclusion of the poor, women and minorities from access to basic services and entitlements; (iii) persistent failure to address accountability, corruption, and poor public sector performance; (iv) ineffective and inefficient intergovernmental relations between federal and provincial levels and marginalization of local governments; and (v) loss of trust by the common citizenry in public institutions.

The government has identified “good governance” as one of the five “strategic pillars” of its poverty reduction strategy. Good governance includes improved strategies and management for external and domestic debt; medium-term budget and expenditure management and financing for pro-poor public services; restructuring of intergovernmental relations, including devolution and civil service reform; access to justice, including legal, judicial, and police reform; and capital markets development.

The thrust of ADB’s assistance for governance reform will be on decentralization, devolution, and governmental restructuring.