February 11, 2008	Monday	Safar 03, 1429

Pakistan has obtained a total of $16 billion in loans from the Asian Development Bank for 127 projects since 1985, adding substantially to total foreign debt that together with external liabilities, now stands close to $42 billion. While the socio-political impact of foreign debts may be hard to quantify, the loans have largely been non-productive.

The economic and social benefits of such loans have been much less than designed or targeted, according to the ADB’s own assessment. In five, out of eight ADB-funded sector loans, the performances over 22 years (1985-2006) have either been ‘unsuccessful’ or partly ‘successful’. Even in areas where the ADB found its operations as ‘successful’, the country’s own problems are more serious than ever before.

For example, ADB has found its performance in energy, transport and communication and law and economic management sectors as successful, but for the nation, the challenges in these areas are enormous today. Delays in project execution, change in direction and objectives during the course of implementation (due to faulty project designing by both the bank and the government) , resulted in cost over-runs and non-achievement of targets, for which loans with heavy repayment costs were obtained from lenders.

The evaluation of ADB’s country assistance programme has recently been done by its operation evaluation department. It is first such assessment of ADB’s 22 years (1985-2006) of operations in Pakistan.

In areas that have a direct impact on social standards of the people, like health, nutrition, social protection, water supply, sanitation and waste management, the outcome has been described as ‘unsuccessful’. Likewise, the outcomes in agriculture and natural resources, education and finance have been rated as ‘partly successful’.

“Delayed project implementation and extensions to loan closing dates are a perennial problem in Pakistan operations,” it said. During this period, “85 per cent of closed loans required an extension, although this improved to 67 per cent for 2001-2006,” it added. Pakistan projects have a similar level of success as those in Bangladesh and Nepal but lower than those of Bhutan, India and Maldives. By decade, the success rate of projects in Pakistan has been remarkably static, with no evidence of improving performance. “This should be cause of concern,” said the bank.

The analysis of project success by sector shows major differences in performance for Pakistan projects. Projects in the water supply, sanitation and waste management sector performed the worst, with only 20 per cent overall success rate, albeit on small numbers, and a 50 per cent success rate for projects approved in 1990s. The bank said that significant governance issues in the water and sanitation sector clearly remain unaddressed. It is most notably corruption that affects performance. “The opportunity for rent-seeking activities in the distribution of an essential good such as water is high,” it noted

The next worst performing sectors were education with a 29 per cent success rate and 50 per cent success rate for projects approved in the 1990s. Pakistan’s education sector is marred by corruption, strong gender and regional inequalities and insufficient budget allocations, leading to social imbalances and poor delivery of services in the public sector.

The ADB reports that, “Pakistan’s education indicators are poor, even within the context of South Asia. Gender and regional inequalities are strong. Unless the performance trajectory changes markedly, Pakistan probably will not achieve the education MDGs (millennium development goals),” said the report.

Finance sector projects with a 30 per cent overall success rate, influenced poorly performing projects with development finance institutions in the 1970s and 1980s and a 50 per cent success rate for later projects. Health, nutrition and social protection projects had a 40 per cent success rate, improving to 50 per cent for 1990s. Although many of the balance projects not rated successful were assessed as partly successful (i.e. desired results were not fully or efficiently achieved, or not sustained), this performance is dismal, it said.

Agriculture sector, the largest group with 33 projects had an overall success rate of 55 per cent with no noticeable improvement in the trend.

Multi-sector projects had a 56 per cent success rate overall. However, the multi-sector success rate dived from 75 per cent for projects approved in 1980s to only 25 per cent for those approved in the 1990s, influenced by the poor performance of projects supporting the Social Action Programme (of the Pakistan Peoples’ Party).

The report said Pakistan’s social and poverty indicators were below those of other countries with similar per capita incomes and have improved more slowly than others with similar growth rates owing mainly to only a 20 per cent overall success rate in areas like water supply, sanitation and waste management. “Compared with Bangladesh, India and Sri Lanka, Pakistan’s school enrolment is lower, adult illiteracy is higher, and infant and child mortality rates are higher.”

Pakistan’s achievement of its Millennium Development Goals (MDG) appears to be fraught with enormous challenges as well. Its average annual economic growth rate of 4.1 per cent over the last 14 years (1993-2006) has contributed to the protracted realisation of the MDG on poverty reduction. Although poverty incidence fell from 29.3 per cent in 1994 to 23.9 per cent in 2005, the proportion of Pakistan’s population still living in poverty was 32.1 per cent in 2005 – significantly above the target of 13 per cent set to be achieved by 2015.

Infant mortality rate is 73 per 1,000 live births, child mortality is 100 per 1,000 live births and maternal mortality is 400 per 100,000 live births. The proportion of population areas at risk for malaria using effective prevention and treatment is 30 per cent, while the proportion of tuberculosis detected and managed through the direct observed treatment short course is 27 per cent. The proportion of the population with access to piped water is 66 per cent, while the proportion with access to sanitation is 54 per cent.

The Asian Bank said that the bottom-up (outcome) assessment of health sector operations was ‘unsuccessful’ while top-down (physical implementation) assessment is ‘partly successful’, although on the lower-end of the scale. The overall sector rating combining bottom-up and top-down assessment is ‘unsuccessful’. That means that construction of buildings and capacity improvement may have been on the positive side, the service outcomes may not have improved due to corruption, absentee staff, missing equipment and medical supplies.

The ADB said that projects in urban areas often failed to turn a high rate, though usually much delayed, of output delivery – sometimes of doubtful quality – into positive development outcomes. An important factor is the financial and management weakness of the urban authorities concerned. Institutional strengthening components usually failed to deliver the intended results, or were only partially implemented.