August 13, 2002	Tuesday	Jamadi-us-Saani 3, 1423

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ISLAMABAD, Aug 12: About 47 million people are living below poverty line in Pakistan, with more than 12 million were added to the rank of the poor between 1993 and 1999, says an Asian Development Bank report released here on Monday.

The report “Poverty in Pakistan: Issues, Causes and Institutional Responses,” was released at a press conference by ADB’s Country Director Marshuk Ali Shah and bank’s Principal Economic Adviser Naveed Hamid.

The report said during the period from 1993 to 1999 the level of poverty worsened from 26 per cent of the population falling below the poverty line in 1993 to 32 per cent in 1999.

The number of people falling below the poverty line was expected to have further increased after 1999, as growth has slowed, development funding has declined and the country has experienced a severe drought.

“Thus it would not be an exaggeration to say that more than a third of the country’s population is currently living in poverty,” it added.

“What little growth occurred during the ‘90s did not contribute to employment and income generation among the poor.”

“After 1997, poverty has been on the rise,” it said.

Speaking on the occasion Marshuk Ali Shah said the ADB would offer $2.5 billion to Pakistan during 2004-2006 to support various development initiatives including measures to alleviate poverty.

“We are extending $1.1 billion in 2002, and $2.5 billion will be offered during 2004-2006,” Marshuk Ali Shah said

He, however, warned the government to effectively carry out the reform agenda, failing which the ADB would be forced to withdraw its financial support to Pakistan.

“Our annual financial support of about $820 million to $830 million will be stopped if Pakistan could not intrinsically carry out its reform agenda,” he added.

Both Shah and Hamid maintained that poverty in Pakistan was rising although substantial local and foreign funds were being spent to address the “very serious issue of poverty”.

The bank, Shah said, would focus on operational strategy for alleviating poverty in Pakistan. The ADB report, he pointed out, had been finalised by meeting all the stakeholders including government officials, private sector experts, political parties, NGOs and other civil society representatives.

He stressed the need for improving growth rate and increasing public spending for alleviating poverty. “The growth in the past was not pro-poor and did not contribute to employment generation. This poverty is seen more in Punjab province,” the ADB’s principal economic adviser said.

Shah said the Water and Power Development Authority and the Karachi Electricity Supply Corporation were responsible for major haemorrhaging of national resources. He was of the view that without carrying out effective reforms, the performance of Wapda, KESC and the Central Board of Revenue could not be improved. All the countries of the world were relying on the generation of their own resources and Pakistan would have to do the same by ensuring improvement in the CBR, he said.

The economic fundamentals of the present government, he said, were there but political instability, law and order and the situation on borders could continue to cause problems to address the issue of poverty in Pakistan.

He agreed with a reporter that donors were risking their financial support by extending funds to Pakistan under the present circumstances.

“They (the government) are moving in the right direction and that is why we are taking a risk to offer our assistance.”

The ADB local chief expressed the hope that the future government would not undo the reform process started by the Musharraf administration.

“Political certainty will be the key factor to ensure turnaround in the economy specially the poverty alleviation,” he added.

The ADB report regretted that while poverty had intensified in the last decade, the country’s long-term prospects for achieving high growth were also being compromised by the low level of social sector investment.

“Pakistan’s education indicators are the worst in South Asia,” the report said, adding that Pakistan’s public sector spending on education and health, at barely 2.1 per cent of the GDP, is significantly lower than that of other countries in the region.

The report also said the effects of poor governance had compounded the economic causes of rising poverty such as decline in GDP growth rate, increasing indebtedness, inflation, falling public investment and poor state of physical infrastructure. At the same time social factors such as the highly unequal distribution of land, low level of human development, and persistent ethnic and sectarian conflict are also obstacles to the achievement of long-term sustained development.

Environmental degradation is also interlinked with increasing poverty and has impacts on the health of poor as on the unsustainability of their livelihoods.

According to the report, the ADB was assisting the government in implementation of various poverty alleviation initiatives specially by offering $300 million devolution support programme for 2002. Also, a loan of $350 million was being processed as part of the Access to Justice Programme, and $150 million for police reform plan.

The report said the ADB would support higher growth and great stability of income and employment in rural areas focusing on (i) getting the policy and institutional framework right, (ii) increasing agriculture productivity and diversification by moving to market-based agricultural prices, strengthening research and extension services, and expanding the role of private sector in storage and agriculture support services, (iii) increasing non-farm employment opportunities by developing agribusiness for exports and rural small and medium enterprises, (iv) promoting rural-urban linkages by improving communications, particularly rural roads, (v) expanding rural economic infrastructure, especially for irrigation, drainage, and water resources, and enhancing access to credit in rural areas, and (vii) investing in infrastructure in areas where incidence of poverty is high, and where the lack of infrastructure is a critical barrier to development.

FARM SECTOR: Speaking on the occasion, Naveed Hamid said recent drought and falling international wheat prices were hitting farmers hard, as he warned the fight against poverty needed to focus on creating jobs in non-agricultural sectors, adds AFP.

“Agriculture is not a means to resolve poverty,” he said.

“We need to create to jobs in other sectors of the economy and reduce the reliance on farming.”

Poverty was concentrated in rural areas, where a feudal social structure, illiteracy and an over-reliance on agriculture were the main culprits, the report said.

Poverty in urban areas was rated at 12.8 per cent, compared to 29.3 per cent in rural areas.

The report found that 70 per cent of adult Pakistani women were illiterate, the highest rate in South Asia.

The ADB cited “poor governance” as one of the primary causes of poverty in Pakistan, which has seen “three out of the four last civilian governments... dismissed prematurely... on charges of corruption.”

Marshuk Ali Shah said the Musharraf government was on the right track, when he was asked for his assessment of its performance.