ISLAMABAD, May 12: The Asian Development Bank (ADB) and Japan will jointly provide $320 million for poverty alleviation in Pakistan.

However, official sources told Dawn that the donors have urged the government to work out a comprehensive plan to judiciously manage the new funds.

They also expressed concern over the state of poverty in the country despite the government’s claim that it had successfully achieved a 10 per cent reduction during the last five years.

Initially, both donors had decided to increase the outreach of small loans to needy people across Pakistan.

Microfinance currently reaches to less than one million people in Pakistan. The market for microfinance is estimated to be over 20 million people.

The proposed plan, called the “reform programme” of the ADB and Japan, is meant to develop an enabling legal and regulatory environment, and the introduction of specific actions to remove bottlenecks and constraints at the strategic level.

The plan will focus on key success factors, including the promotion of technology and applications to achieve national scale at reduced cost for all types of financial service providers; expanding the range and quality of financial products and services, including those for the Islamic market; developing public-private partnership to expand outreach; stepping up reliable business and credit information systems; expanding fast, reliable and lower-cost remittance services for overseas workers; capacity building for institutions and authorities; and support for literacy programmes to improve access to finance and its utilisation for sustained economic growth.

Sources said the goal of the proposed programme was to assist the government in reducing poverty, building an inclusive financial sector and promoting sustainable economic growth by using technology and applications to lower the cost of delivery of financial services and improve efficiency.

The objective is to ensure access to sustainable institutional financial services for most poor and low-income households, sources said. The ministry of finance will be the executing agency and will provide the necessary staff, office space for advisers and coordinate activities among the implementing agencies.

The implementing agencies will be the State Bank of Pakistan, Central Board of Revenue, Ministry of Information Technology, Pakistan Post and the Sindh government’s Board of Revenue. A Programme Coordination and Implementation Unit will also be established in Islamabad.