ISLAMABAD, May 2: Poverty is worsening in Pakistan and the government should spend more on education, health and women to effectively deal with the issue, says ADB Country Director Marshuk Ali Shah.

“Poverty has worsened in Pakistan and the government should adequately enhance its development expenditure to bring to an end this problem,” he further said

Mr Naved Hamid, Senior ADB Economic Adviser, said that there was 36 per cent poverty in Pakistan which was very high.

“This poverty has increased in 2001 and 2002 but we hope that it will decrease in 2003,” he said, adding that the government had finalised a household survey on poverty which was expected to be released shortly.

Speaking at a news conference here on Friday, Mr Shah, however said, that credit went to the government for spending 4 per cent of the GDP on the development in order to alleviate poverty.

But he stressed the need for investing more in health, education, human resource and women to increase the literacy rate in the country.

The current literary rate, he said, was 46 per cent which was not quite low. He said homogeneous and sustained efforts were required to reduce poverty and that initially the government should spend more on primary education.

He also told reporters that the ADB would extend $2.6 billion to Pakistan during 2003-05 for undertaking more development projects in the country.

“We plan to offer $2.5 billion to $2.6 billion to Pakistan during the three-year period which is about $850 million annually.”

Mr Shah said that his bank would provide close to $1 billion for various development projects in 2003.

“But if the government continues to implement structural reform agenda as agreed with the IMF, the ADB could increase its assistance for 2003-05,” Mr Shah said.

Responding to a question, he said the Pakistan government had assured the ADB of removing all kinds of subsidies on fertiliser, agricultural inputs, irrigation equipment and withdrawal of other unnecessary exemptions given to various industries.

“We have told the government that only the rich landed gentry is benefiting from the agriculture-related subsidies and, therefore, it should be phased out quickly,” he added.

He said the government has also assured the ADB to withdraw gas subsidy on fertiliser, “but this does not mean that fertiliser manufacturers should raise the cost of their product.”

Nevertheless, he said the increase or decrease in the prices of fertiliser and other agricultural inputs should be left to market forces and that the government should not have any role in it.

Pakistan, Mr Shah said, needed sustained structural reforms in trade, industry, capital market and judicial sectors for which the ADB had offered a massive amount of $3 billion. “And if you continue offering subsidies and concessions then you should not expect any change to make the state sector viable,” he said, adding that the Karachi Electricity Supply Company (KESC) was losing Rs2 billion monthly to cover up its management losses. “That is why it is imperative to privatise the KESC and Wapda,” he said.

He warned of serious consequences if the government buckled under pressure to reintroduce concessions and financial incentives to various industries.

“Pakistan’s economic recovery is still fragile and there is a danger of complacency,” he said, calling upon the government to ensure that there was no fundamental change specially during the next three years.