AS the donations needed for relief and rehabilitation of the over three million survivors of the earthquake rises to $5.2 billion including $3.7 billion for rehabilitation and reconstruction, Pakistan’s capacity to use the external assistance effectively and expeditiously has come into question. The donors are also concerned that the large aid should be not be misused.

At issue is not only the utilization of $2.5 billion so far pledged but domestic resources for the Annual Development Budget of Rs272 billion which may undergo some pruning now.

The donors have suggested that the rehabilitation and reconstruction programme should be brought under the purview of the Auditor General of Pakistan (AGP) whose integrity and competence is acknowledged by the country. The donors are particular that there should be no irregularities in the vast procurement system for rehabilitation and reconstruction as the process had earlier come under heavy criticism.

The donors do not want the performance of the army in the devastated areas to be audited by the military itself. Instead they want the AG to audit those accounts. The donors also do not want the army to charge a fee on the donors contribution for the work it is doing in the quake-hit areas and instead bear the cost by itself

The use of the donors funds has become an issue all the more as the Asian Development Bank, which is funding many projects, has come up with a report on Pakistan’s aid utilization and project building in the social sector for the last 20 years. It is an unflattering report for Pakistan when it is crying for more and more funds for social sector development. The report says the success of the social sector projects in Pakistan is low in relation to some other sectors and in other developing countries.

The ADB‘s Sector Assistance Program Evaluation (SAPE) says in over 20 years there was only one successful education project in Pakistan out of seven, one in the health sector out of five, and none in the water supply, sanitation and urban development sector out of nine. And none in the multi-sector category out of two.

The social sector operations generally mirror overall poor performance, which takes a long time to become effective because of slower disbursement of needed funds and results in delayed project execution.

These factors, says the report, are inter-related and there is a certain inevitability that the social sectors will suffer from implementation delays.

According to SAPE‘s ratings of 24 projects, only eight per cent were adjudged as successful, 58 per cent partly successful and 33 percent were adjudged as unsuccessful. Such evaluation says the report is in line with the aggregate post evaluation ratings for all social sector operations.

But the performance of the social sector operations has improved from zero per cent success in the 1970‘s loan approvals, 25 per cent success in 1980‘s and 38 per cent in 1990’s. This improvement is a matter for some relief, but it has to be sustained until total success can be reached. But the fact that one third of the facts are not adjudged, success is a matter for real concern, particularly as it effects education, public health, environment and the social infrastructure.

The ADB takes note of the lack of meaningful engagement of the government in the design and formulation of projects. Senior decision-makers focus on the projects only once it has been approved by the ADB.

The report says there is a political dynamics to see as many projects as possible approved by the ADB. And that with the need to raise counterpart funds, which may not be easily available, delays the projects. The exceptional period for implementation was 1995-1998 at the height of the social action programme decade when the social sector accounted for almost 30 per cent of the loan approvals.

In the earlier years, the economic growth was the primary objective possibly in the hope that wealth once created will trickle down to the poor, which did not materialize.

The report says that no private sector operation has been undertaken in the social sector assigned to it. Education has accounted for the greater share of the social sector (40 per cent) water supply and sanitation (24 percent) , health and population (21 per cent) and urban development (12 per cent) of the social sector development funds.

While the Annual Development Plan outlay goes on increasing- from Rs120 billion in 1998-1999 to Rs272 billion in the current year, the funds are not well utilized and many of the projects undertaken are not completed on time. There is a large waste of resources and delay in the commencement of utilization of the project. No wonder, educational levels within the country and public health facilities are poor, while we are calling for more and more aid for the social development sector. We have now to show, we can use the aid well and get the targeted outcomes.

While we ask for $5.2 billion, we have to show the real capacity to meet the new challenges and achieve the promised goals.

President Musharraf says Pakistan is ready to accept third party audit to make sure there is no misuse of the donor’s funds, while the donors proposed to come up with a six monthly report on utilization of the assistance.

The government is also agreeable to let the AG to scrutinize the accounts in this area. The President is willing to accept the nomination by the donors of any international agency for auditing the aid funds and their utilization.

The possible role of the Public Accounts Committee of the National Assembly has been discussed but the donors feel there is a long time lag between a misdeed in the official sector and its actual probe by the committee which makes such investigations useless.

Hence the preference of the donors is for the AG to undertake the task much quicker. The donors want civilian supervision of the relief work and what kind of arrangement finally materializes remains to be seen.

Mr Shaukat Aziz wants a parliamentary committee of leaders of all parties to be associated with the relief work. But the opposition leaders have their reservations.

We have now to build the capacity to handle large projects and complete them in good time and make the production or service delivery start as scheduled. International donors are willing to train Pakistanis in this area and we have to make the best of it to qualify ourselves for larger international aid.