ISLAMABAD, April 15: The World Bank has assured to extend $350 million new funding under Structural Adjustment Credit (SAC-2) programme before the end of 2001-2002 to further help improve Pakistan’s balance of payment position.
The World Bank’s Vice President for South Asian Region, Mieko Nishimizu met Minister for Finance Shaukat Aziz on Sunday immediately after her arrival from Afghanistan and assured him to disburse $350 million SAC-2 by June 30 this year.
Like the previous SAC-1 which was of the same amount and was disbursed in August last year, SAC-2 will also be disbursed from the International Development Agency’s (IDA) concessional window of the World Bank at 0.7 per cent service charges. It will be disbursed as a single tranche.
According to informed sources, the World Bank’s vice-president, however, expressed concern over declining revenues and said that Shahid Hussain committee’s report on tax administration should be implemented in letter and spirit for increasing revenues and plugging leakages.
The IMF and the Asian Development Bank have also reportedly expressed concern as to why the recommendations of the committee on tax administration were being resisted by the Central Board of Revenue.
Sources said that the finance minister assured Ms Nishimizu that the revised Rs414billion revenue collection target for the current financial year will be achieved. He said that the restructuring of the CBR will be completed within this financial year.
The vice-president of the bank also called for increasing exports through diversification and ensuring value addition. She was told that remittances have almost doubled during the first six months of 2001-2002 compared to corresponding period last year. She urged the finance minister to improve investment climate for attracting foreign investors by ensuring consistency and continuity in policies. The World Bank was also asking the government to increase spending on social sectors to further qualify for assistance specially for poverty alleviation.
Sources said Pakistan has been asked to improve law and order situation and ensure continuity of economic policies.
Sources said that the World Bank although appreciated poverty reduction programme, good governance and decentralization, it believed that corruption needed to be overcome.
Similarly, the government was expected to improve delivery services specially in the rural areas.
The shifting of government’s thrust from building motorways, telecommunications and developing infrastructure to poverty alleviation and increase in spending in social sectors was appreciated.
The Bank said that the present government was spending four per cent of the GDP on social sectors compared to two per cent of 1980s, and 2.5 per cent of 1990s.
Sources said that the World Bank has noted less than five per cent of the GDP spending on defence compared to seven per cent of late President Zia ul Haq’s period.
The World Bank wanted progress on power sector, accelerating the process of privatization and improving water management for increasing agricultural productivity.
Sources said that the World Bank has also sought clarifications as to why the government continued to increase petroleum surcharge.
