ISLAMABAD, Feb 28: The World Bank has agreed to finance vital infrastructure development projects and enhance funding for poverty alleviation and small and medium enterprises (SMEs).

However, informed sources told Dawn that during meeting with Prime Minister Shaukat Aziz and other senior officials on Monday the visiting World Bank team led by senior Vice President and Chief Economist Mr Francois Bourguignon urged them to prioritise sectors for increased assistance of the bank.

The World Bank vice president expressed the hope that $1 billion Bank's annual assistance will be forthcoming for Pakistan from 2005 to help meet its development requirements.

The sources said that the bank wanted Pakistan to spend more on improving its old infrastructure to facilitate increased local and foreign investment in the country. The prime minister informed the bank's team that over Rs250 billion were being spent on improving the infrastructure and that more funds would be allocated for this purpose during 2005-06.

The sources said that Mr Aziz also told Mr Bourguignon that poverty has started reducing in Pakistan due to government's consistent policies and improved implementation strategy.

The prime minister also apprised the team about the improvement the macroeconomic indicators during the last few years.

Later, the bank vice president and his team also met Prime Minister's Adviser on Finance Dr Salman Shah, Minister for Privatization and Investment Dr Abdul Hafeez Sheikh, State Minister for Finance Omar Ayub, State Minister for Economic Affairs Ms Hina Rabbani Khar and the secretaries of finance and the Economic Affairs Division (EAD).

During the meeting Country Director of the World Bank John Wall was also present.

Dr Salman Shah informed the visiting team about the progress on four priority areas, covering education, human resource development, water and energy security and second generation reforms.

He also informed the Bank's team about various initiatives and structural reforms introduced by the government due to which the macroeconomic indicators were now presenting a positive picture of Pakistan's economy.

Dr Shah said that the growth rate was on the rise and this year Pakistan was anticipating 7-8 per cent GDP growth rate. Inflation has been brought under control and the government intended to associate private sector in different public sector development programmes.

The adviser told the WB team that with the help of Agriculture Support Fund and the Innovation Fund for SMEs, Pakistan intended to upgrade agriculture sector by introducing new products and value-addition. This sector, he said, has a tremendous potential and could generate employment opportunities which would help reduce poverty.

The advisor asked the WB team to suggest ways to overcome bottlenecks faced by Pakistan in the implementation of various economic programmes. He also admitted that there was a need to focus on quality education and the asked the team to propose a programme of vocational and technical training suitable in the context of Pakistan to cater to the growing demand of the markets.