May 15, 2003	Thursday	Rabi-ul-Awwal 12, 1424

Please Visit our Sponsor (Ads open in separate window)

ISLAMABAD, May 14: Pakistan has been urged by the international donor agencies and bilateral creditors to substantially increase budgetary allocations in the year 2003-04 for reducing poverty and narrowing social gaps.

The representatives of donor agencies and bilateral creditors asked the government on the last day of Pakistan Development Forum meeting here to implement well-designed social policies to address the serious issue of poverty in Pakistan.

IMF representative Klaus Enders pointed out that the key challenge for the authorities remained reducing poverty and bridging the social gaps from their present “intolerable levels”.

“While the measurement of poverty has fuelled much debate recently in Pakistan, clearly poverty remains high,” he said.

This outcome, he added, mostly reflected insufficient private investment and growth, the impact of drought on the rural regions, and inadequate provisions of basic social services, and low public spending on human development.

Enders said some of the main institutional causes of poverty, such as ownership of land and other assets and deep-rooted gender issues, “have yet to be fully addressed.”

He pointed out that higher sustainable growth was the element most needed to make a significant dent in poverty. “Growth needs to rise at least 5-6 per cent within a few years, without endangering hard-won stabilization gains.”

The IMF representative said that because of high inflows of private capital and remittances by overseas Pakistanis, the authorities needed to strike a careful balance between allowing some appreciation of the Pakistani rupee, and using the opportunity to further build reserves and allow a continued rapid expansion of monetary aggregates.

“However, the most important and difficult element of macroeconomic policies will be continued fiscal adjustment to reduce public debt,” he said. Further implementation of structural reforms, centred on improving governance at all levels of the state and further liberalization of the economy, will be essential to boost productivity growth,” he added.

“Crucial governance reforms include the adoption of a fiscal responsibility law, and an anti-money laundering law, a strategy to reduce the abuse of ‘Benami’ practice, but also measures to ensure reliable provision of key public services,” he said.

He also stressed the need for unbundling and corportization of Wapda for its gradual privatization.

The World Bank Country Director for Pakistan and Afghanistan John Wall said that despite the success of the government’s economic reform programme over the last three years, these successes were fragile.

“They have not yet brought about a significant reduction in poverty,” he said, adding that this will take higher growth to be sustained over a long time.

“We are reassured by the government’s comprehensive poverty reduction strategy which in its present summary is close to a very good final form,” Wall said.

He said the donors needed to be continuously reassured of the government’s commitment to governance reforms — perhaps the most important element of the reforms programme. “Good governance takes eternal vigilance — it has to be earned every day. We see hopeful signs that Pakistan remains on the road towards a new political culture of good governance,” he added.

A number of foreign representative, including the Canadian High Commissioner to Pakistan, also said the government should get its PRSP approved by parliament along with the new budget with a view to having the full ownership of the programme.