ISLAMABAD, Oct 27: The World Bank has indicated it will provide substantial financial assistance during 2004-07 but wants Pakistan to implement, on a priority basis, the bank's key recommendations on the CBR, CDNS, Wapda, KESC, devolution and civil service.

Informed sources told Dawn that three WB missions had arrived and another two would be reaching here before the end of October with a view to reviewing the bank-aided projects and assessing the future funding requirements of the government.

While the bank, they said, was inclined to extend new funding other than for the 18 ongoing development projects, it wanted the government to increase its capacity to spend more to help the donor agency to accelerate its disbursement level.

The main objective of the missions is to ensure implementation on the bank's Country Assistance Strategy (CAS) and the Poverty Reduction Strategy Paper (PRSP) in the country.

Pakistan has been told to implement the key recommendations of the bank in order to increase the "project lending" which required regular negotiations between the two sides.

The adjustment lending, the sources said, was not a problem as it was offered in one single tranche, but the project lending was spread over to five years and required implementation of recommendations.

In this regard, the bank expects the government to contain the overall fiscal deficit (including external grants) to three per cent of GDP on average during 2004-07.

The government has been asked to accelerate CBR reforms, including a complete reorganization over a three-year period (2004-07) and fundamental changes in resource management.

The government has been urged to speedily complete privatization plans that are underway and develop a realistic but proactive timetable for the privatization of Wapda and KESC. The World Bank wants the government to make efforts to reduce technical losses in the power sector.

The government has been further asked to reduce the margin on national savings schemes over the Pakistan Investment Bond (PIB) yield. The bank has urged the government to fund the poverty reduction strategy adequately by raising priority poverty spending by two per cent of GDP to about seven per cent by 2007 and substantially increase allocation for education and health, focusing on both quantitative and qualitative improvements.

The government has also been urged to develop a clear vision which integrates long-term development of agriculture and power sectors with investment in the irrigation sector. Also, the bank wants improvement in the water sector investment strategy, which strikes appropriate balance between the expansion of irrigation facilities and additional storage facilities.

The sources said that it was recommended by the bank that the government needed to move ahead rapidly on the creation of National Executive Service that would greatly increase incentives both for improved performance and for upgrading skills through learning and education. Similarly, they added, the government had been advised to avoid flat rate increases that did not decompress salaries or provided motivation for important occupational groups.

The government had also been asked to give the Federal Public Service Commission (FPSC) and the provincial public service commissions (PPSCs) an unambiguous responsibility for oversight of the recruitment process at all grades, they added.

According to the sources, the bank wants the government to complete the devolution of power to district level by extending administrative and fiscal autonomy, improving capacity and expanding funding. The government has also been advised to undertake devolution from the federal to provincial governments with appropriate funding arrangements.