April 10, 2007	Tuesday	Rabi-ul-Awwal 21, 1428

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ISLAMABAD, April 9: The World Bank (WB) and the Asian Development Bank (ADB) have expressed concern over the government's ‘inability’ to implement second generation reforms in the country that were reportedly being delayed due to the present political conditions.

Informed sources told Dawn on Monday that both donors believed that any further delay in implementing the reforms particularly those related to the judiciary, police and civil services could cause more problems and they must be carried out within this year.

“The government is dysfunctional and as such cannot do any thing including to implement the second generation reforms,” said a senior government official. The official regretted that the government had deputed ‘unsuitable people’ at various important positions.

However, the prime minister's advisor on finance Dr Salman Shah said that the implementation of reforms was ‘difficult’ especially those related to the civil services. “But we are doing our job,” he said, adding that civil servants were being sent abroad for training including at the Harvard university and the Kennedy school.

Similarly, a committee headed by the former State Bank governor Dr Ishrat Hussain was working to finalise civil service reforms soon, Shah said. “It may take time but we must understand that the process started with the initiation and completion of first generation reforms across the country,” he said.

Over the next five years, he said the reform agenda would include the strengthening of institutions, improving competitiveness in industries, building robust financial systems, strengthening the tax administration, promoting transparency in economic decision making, implementing reforms in the capital market and reinforcing the infrastructure of the country.

But sources said that the government has informed the international donors that it may take at least another five years to implement the reforms.

They said that serious difficulties had delayed the process and the government would not be able to start even in the current year.

Not only the second generation reforms need ‘huge financial resources’, but the laying off of thousands of employees to reduce the bureaucracy force might become a politically unpopular move, the sources added.

Sources said that WB and ADB were wondering why the second generation reforms could not be carried out despite receiving adequate foreign funding. In this regard, ADB's $350 million assistance for judicial reforms had particularly been mentioned with some officials conceding that the process was ‘too slow’ and needed acceleration by the government and the higher judiciary.

The first generation reforms had been related to the rationalization of utility prices, fiscal deficit, the National Tariff Commission, the Security Exchange Commission of Pakistan, stock markets and the deregulation, privatization, liberalization and devolution of the financial sector.

WB had prepared three reports on Pakistan's civil service reforms and had handed them over to the government for implementation.

The bank's fourth report on the same issue was about to released. “This is very disturbing for the World Bank which does not believe to have any real change in Pakistan without undertaking and completing the second generation reforms,” a source said.