ISLAMABAD, Nov. 5: The Poverty Reduction Strategy Paper (PRSP) is the extension of structural adjustment policies (SAP) of the World Bank and the IMF and will only exacerbate poverty, experts attending a two-day international workshop said here on Wednesday.

The workshop has been organized by the Action Aid Pakistan in conjunction with various Action Aid groups of Asia to arrive at an integrated approach to the problem, particularly, in view of the fact that, contrary to the initial proclamations of the “donors”, the process through which the PRSP was formulated and was being implemented by the government was not participatory at all.

Besides civil society activists from Pakistan, the workshop is being attended by representatives of Action Aid from Viet Nam, Bangladesh, Nepal and Rwanda.

The experts observed that the only difference between the two programmes was that in view of the adverse effects of the SAP in the shape of increasing poverty, the international financial institutions styling themselves as “donors” had tried to shift the responsibility for the outcome of the PRSP to the countries concerned.

Dr A.R. Kemal, Director, Pakistan Institute of Development Economics (PIDE) and Sartaj Aziz, former finance minister of Pakistan, were the main speakers of the opening session.

Describing the PRSP as continuation of the SAP, Dr Kemal said the latter had resulted in increase in poverty because its main plank was reduction in fiscal deficit. This policy was pursued without taking its impact on poverty into account.

In Pakistan, the fiscal deficit could be brought down either by increasing income or reducing the expenditure. The government chose the latter course and the result was drastic curtailment of development expenditure. This accentuated unemployment and spread poverty.

Dr Kemal also criticised the general sales tax because it had proved detrimental only to the poor and benefited the rich. So did the withdrawal of subsidies on agricultural inputs. The expectation that absence of subsidy would be compensated by higher prices on output did not materialise.

As it is the large farmers who produced enough to sell in the market, the PIDE chief remarked, the small farmers found themselves doubly deprived both in terms of inability to purchase inputs and found necessities of life ever more dear.

Mr Sartaj Aziz said a major flaw in the adjustment policies was the notion about superiority of market system vis-a-vis the government’s role. The inherent inadequacies of the market were in fact fully understood in the more advanced countries and, accordingly, they have developed an elaborate system of taxation and social security to protect the weak and assist the poor.

“But at the global level, they refuse to recognise the impact of inappropriate globalisation policies on the poor and evolve similar compensating mechanisms and policies,” he remarked.

The chronically poor, he further stated, were poor because they had no land or other income generating assets. They have limited access to education and health services and, therefore, were unable to improve their skills or income earning capacity.

“A more meaningful Poverty Reduction strategy will have to bring about a paradigm shift in development policy to reverse the vicious circle of this unfavourable social and economic environment in which the poor are caught and at the same time alter the structure of growth in favour of the poor,” the former finance minister stressed.

Dr Khadim Hussain, Manager Economic and Political Rights Unit, Action Aid-Pakistan, said the PRSP was part of the same programme that included corporate farming and a whole set of other programmes that would further deprive the small farmers and landless poor by diluting the age-old Tenancy Act and negating land reforms.

Relating his own experiences, he said the whole process of PRSP was a controlled process and its other objectives were privatisation which had produced only poverty and unemployment so far. The PRSP had been brought forward only to dress up policies which had already brought miseries to the people.

Mr Mushtaq Gadi, a civil society activist, charged that the manner in which the PRSP had been bulldozed proved the continuation of nexus between the military regime and the Bretton Woods institutions which was witnessed in the latter’s policy to support the referendum in the name of continuity of the former’s policies.

He also noted that the government had shown only 0.25 per cent increase in poverty-related expenditure but also included some mega projects in it. He accused the “donors” of trying to bribe the NGOs for their support to the PRSP.