July 11, 2002	Thursday	Rabi-us-Sani 29, 1423

ISLAMABAD, July 10: The Board of Directors of the World Bank has approved four projects totalling $236.5 million to support Pakistan’s 30-month old reform programme, which is in line with the country’s Poverty Reduction Strategy and the World Bank’s new Country Assistance Strategy (CAS).

The four projects are: the Sindh and North West Frontier Province (NWFP) structural adjustment credits, the community infrastructure and services project credit for Azad Jammu and Kashmir (AJK) and the Banking Sector Technical Assistance (TA) credit. These projects underpin Pakistan’s ongoing economic and structural reforms, which are aimed at poverty reduction by engendering growth, improving governance and human development, improving social service delivery and enhancing social protection and employment opportunities.

According to an announcement made by the World Bank local office here on Wednesday, the government of Pakistan launched a national reform programme in December 1999. Since then it has implemented a number of reforms, including improvements in governance, tighter fiscal controls and increased attention to social service delivery.

“The four operations we presented today support the government’s Poverty Reduction Strategy and its deep commitment to governance reforms that we have seen progressing for well over two years now,” said John Wall, Country Director for Pakistan.

“It is at the provincial level where basic service delivery happens and where poverty reduction programmes can have their sharpest impact. Pakistan’s provinces have suffered from poor governance and a lack of fiscal capacity. Today’s structural adjustment operations help the government of Pakistan take its federal reform commitment to this provincial level,” he added.

The Sindh and NWFP Structural Adjustment credits, $100 and $90 million respectively, support improvements in public finances, governance and financial regulatory frameworks. Both provinces have already embarked on comprehensive fiscal and economic reform programmes and have sought World Bank assistance to advance this work.

The additional resources approved for the provinces will, for example, enable NWFP to increase social expenditures as a share of total spending from 27 per cent in FY02 to 35 per cent in FY03. A large share of this will be used to provide all girls schools with basic facilities such as toilets and water. The objective of the $20 million credit for AJK Community Infrastructure and Services Project is to improve the well-being of unserved and undeserved low-income communities through the delivery of cost-effective and sustainable small infrastructure and services schemes. Around 88 per cent of AJK’s 2.9 million people live in rural area and are dependent on forestry and agriculture for their livelihood. While some social indicators have improved in recent years, over 60 per cent of the population still has no direct access to water.

The project is designed to fully involve communities in the process of identifying, designing, implementing, maintaining and owning these schemes. The district government and community-based organizations (CBOs) will work hand-in-hand to ensure that basic services like the supply of clean drinking water, sanitation, health services and solid waste management reach the poor at the grassroots level. The project also provides for capacity building and the strengthening of institutions both at the district and lower levels of government and in the CBOs.

The $26.5 million Banking Sector Technical Assistance credit follows the recently completed financial sector deepening and intermediation project (FSDIP).

The technical assistance project support the completion of restructuring measures initiated under FSDIP, and complements broader reforms in the financial sector. The project will support the government’s efforts in transforming the State Bank into a professional, efficient and modern institution.

The restructuring measures supported under the project include: improving the standards and quality of personnel, modernizing operations by automating processes, strengthening an building capacity for banking sector regulation and supporting the privatization of the nationalized commercial banks.

The credits, from the International Development Association (IDA), The World Bank’s concessionaire lending arm, have a 35- year maturity with a 10-year grace period and a 0.75 per cent service charge.