ISLAMABAD, Jan 13: State Bank Governor Dr Ishrat Hussain on Tuesday said poverty could not be reduced without first strengthening the institutions. He said the problems of the common man that he faced on village , tehsil or district level could not be resolved by the individuals sitting in provincial headquarters or in the federal capital. Institutional strengthening was a must for proper delivery of services, he said when asked why poverty was not coming down in Pakistan.

The SBP governor was talking to newsmen after presiding over a Mehbubul Haq memorial lecture at the 19th Annual General Meeting and conference of the Pakistan Society of Development Economics (PSDE) here on Tuesday.

He said individuals could also act as institutions and start taking initiatives to work for alleviating poverty. An individual in his own capacity could work at lowest level, from his community to tehsil and then to the district levels.

Asked about financial devolution for the purpose, Dr Ishrat said provincial finance commissions had been formed and after the Sixth National Finance Commission (NFC) award was announced, the process of financial devolution would begin.

He said the Saarc finance committee was working on two options- whether to set up an independent Saarc development and trade bank or to form a consortium of regional banks to promote regional trade and economic cooperation.

Dr Ishrat is the chairman of the Saarc Finance committee constituted by the Saarc summit meeting early this month. Heads of central banks of other Saarc states are members of the committee.

He said the regional finance committee had been given the mandate to finalize a report in one year on setting up of a Saarc development bank or to explore the other option of forming a consortium of banks from Saarc member countries to facilitate the proposed free trade and boost economic cooperation in the region.

In reply to a question, Dr Ishrat said an expert group of member countries would be constituted in the forthcoming meeting of the financing committee in April in Washington to finalize the feasibility to see whether a bank was really required in the first place.

He, however, added that a bank was a must to promote trade and for intra-regional payments and settlements, and to finance the development projects in the region and to complement the efforts of establishing a free trade regime in the region.

The second meeting of the Saarc finance committee would be held in September 2004, and would be attended by finance secretaries and the heads of central banks so that a final report could be place before the next Saarc summit meeting to be held in Dhaka next year.

He said the idea of the Saarc development bank had been conceived to support the initiatives of free trade in the region and the proposed financing of the development projects.

Answering a question on his visit to Kabul to attend the Pak-Afghan Joint Ministerial Commission and then join Prime Minister Zafarullah Khan Jamali's delegation, Dr Ishrat said Pakistan had been given a licence to set up a branch of the National Bank of Pakistan (NBP) in Kabul, and another licence to Habib Bank Limited to open its branch.

He said the prime minister had asked the Afghan government to allow the National Bank to open two more branches one each in Jalalabad and Kandahar.