December 23, 2006	Saturday	Zilhaj 01, 1427

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LAHORE, Dec 22: Adviser to Prime Minister on Finance Dr Salman Shah has said Pakistan needs to integrate institutions of education and governance for market-oriented economic development.

Speaking as the chief guest at the concluding session of the four-day conference on “Governance and institutions” organised by the Pakistan Society of Development Economists here on Friday, he said the country had been included in the list of 11 markets of the 21st century by international investment bank, Golden Sachs, in view of its potential for long-term economic growth on account of its large market and demographic profile with 54 to 55 per cent under-19 youth population.

He said Pakistan had a 6.8 per cent GDP growth rate against three per cent regional average with potential to increase up to 11 per cent by 2015 through diversification and expansion of its textile-dominated industrial base through improvement in capabilities of its workforce.

The Planning Commission had already allocated Rs1,100 billion for increasing the access to higher education from three per cent to six to eight per cent during the next 10 years under the Medium Term Development Framework. Higher education standards would also be improved with the help of nine foreign universities.

He said the government had decided to involve private sector for infrastructure development to facilitate increase in investment as it did not have the huge resources required for the purpose. Two companies had been set up in the private sector for the purpose. He said Pakistan could benefit from the free trade agreement with China because it would open its huge market for Pakistani goods.

Talking to newsmen later, Mr Shah -- also adviser on Revenue, Economic Affairs and Statistics, said petroleum products’ prices would not be reduced till the recovery of Rs15 billion spent by government to keep the rates low despite increase in international prices. Recovery of the amount was necessary for financial discipline because deficit had not been allowed by the national assembly in the federal budget.

He said core inflation had come down to 5.5 per cent. Only food inflation was present due to increase in onion and potato prices. Potato prices had come down with the arrival of new crop and onion prices had been controlled by imports from India. Sugar price, too, was coming down after the commencement of new crushing season. The price of commodity had been reduced to Rs26 per kg at the utility stores.

He said the brokers involved in the Karachi stock market crash were being proceeded against in accordance with law.

Speaking on “State and Pakistan Economy”, former World Bank chief economist Dr Pervez Hasan said economic liberalisation and structural reforms were necessary and had become overdue. Liberalisation measures though sound in themselves had the impact of diluting urgency of macroeconomic adjustment.

He said the agenda for the role of state in Pakistan economy remained both large and challenging notwithstanding the strong revival of the private sector. The country required a government structure that could deliver public service on priority basis. There was a lot of talk about second-generation reforms, but a lot of basics of governance were yet to be put fully in place. Fiscal policy must play a role in not only supporting public interventions to reduce poverty, but also to moderate income disparities.

The issue of urban income disparities must be addressed through examining the access of land for middle classes which were in growing danger of being locked out of housing and real estate boom.

International Monetary Fund economist Aziz Ali Muhammad discussed the dilemma pertaining to conditions on governance imposed by international financial institutions in the course of their lending operations. Governance related to activities of governments and other public-sector entities in the exercise of their developmental and regulatory functions that bore directly on the efficient use of funds provided by the international financial institutions.

The conditions had bearing on diverse areas, including allocation of funds, procurement of goods and services and even judicial system.

He was of the view that most of the developing countries could not meet the good governance standards prescribed keeping in view the conditions in advanced countries. The international financial institution should either review their policy of imposing conditionalities or stop dealing with authoritarian regimes.

In her study report on “Political Decentralisation”, International Food Policy Research Institute Senior Research Fellow Regina Birner said there were considerable obstacles for the people to use their vote as voice for improved service provision and gender equality in local government elections. There were administrative barriers to voting for the poor, especially lack of identity cards and registration in elections. Voting was both on identity as well as performance basis. More than 40 per cent of the very poor considered the opinion of landlord and his political faction in their voting decision.

She was of the view that there was a need for improvement in the voting process so that the poor and the women could exercise their vote freely as it was the only mechanism through which decentralisation could lead to better service provision.

Ali Cheema from Lahore University of Management Sciences’ economics department said there was a possibility of use of devolution process by the elite for assuming control of resources. Devolution would be effective only if the power and resources were transferred to the poor and were used for improvement in service delivery at local level.

District Nazim Mian Amer Mahmood said all administrative powers enjoyed by the deputy commissioners had not been transferred to the elected district nazims. The functions of different government departments had been devolved, but the employees continued to be controlled by their parent departments despite being placed at the disposal of district governments. A district cadre of employees was required to be created for completing the devolution process.

He also stressed the need for creation of municipal police and magistracy for performing the municipal functions of district governments. Stressing the need for simplification of processes he pointed out that people desirous of getting national identity cards after reaching the age of 20 years were required to submit an application to the executive district officer (revenue) which reached the patwari and union council nazim for verification through district officer (revenue) and tehsildar.

The card was issued after the application was returned to the EDO in three to four months. He said an average 50 applications were received for identity cards every month and every applicant had to spend Rs5,000 to Rs10,000 for greasing the palms of officials.

He said the pace of utilisation of funds through citizen community boards had doubled compared to the past four years as a result of capacity building of the people. He said the district government were getting the required funds through the provincial finance commission. The district government system had helped in solution of the problems of the people at local level.