ISLAMABAD, Dec 7: The World Bank and the Department for International Development (DFID) of the United Kingdom have asked Pakistan to substantially increase the social sector spending as over 38 million people, out of 160 million, were still living below the national poverty line.

Informed sources told Dawn on Wednesday that both donor agencies also urged the government to fulfil its promise of increasing spending on education from 1.9 per cent to 4 per cent of GDP to improve what they termed 'highly neglected' educational indicators.

Nevertheless, both international agencies have promised to double their poverty related funding from $460 million to $933 million annually with a view to put some effective dent on widespread poverty in the country.

The government often claims that there has been 10 per cent reduction in poverty from 35 per cent to 25 percent during last few years. But it concedes that poverty and unemployment were some of the big challenges which need to be tackled.

However, sources said that donor agencies did not totally agree with the government's claim of 10 per cent reduction in poverty. "The World Bank believes that it was some 5 per cent reduction in poverty and has informed about its views to the Pakistani authorities," a source said.

The World Bank and DFID have also assured the government to provide Rs585 million worth of technical assistance in support for implementing the Poverty Reduction Support Credit (PRSC) programme. The fund will be used to support development, implementation and monitoring of policies of the Poverty Reduction Strategy. This includes targeting the poor and vulnerable, promoting growth and macroeconomic stability and supporting a governance framework that will enable better health and education services for the country.

A new Country Assistance Plan will be developed over the coming months to set the framework for using these extra resources, with consultations starting in Pakistan very soon.