ISLAMABAD, Dec 4: The Asian Development Bank (ADB) on Thursday approved a loan package of $204 million to assist the government of Punjab in its reform programmes.
The Punjab Resource Management Programme is the first part of three loans, envisaged to amounting up to $500 million over five years, to improve socio-economic indicators and bring down rising poverty level as outlined in the government’s Poverty Reduction Strategy (PRSP).
The programme will complement and integrate at the provincial level various other governance-related initiatives in the PRSP, including those for fiscal devolution, decentralized service delivery, financial reporting, auditing and gender reform.
The emphasis of the first loan will be reforming provincial finances through fiscal restructuring and financial management. It will also initiate reforms to promote pro-poor service delivery and create opportunities for growth and income generation through private sector development to be deepened under two sub-programmes that are planned to follow.
“To achieve fiscal sustainability of the reforms, the programme aims to bring about a structural shift in the provincial financing pattern,” said Werner Liepach, director co-financing operations at the ADB, and mission leader.
“Strengthening provincial revenues, rationalizing provincial expenditures and improving effectiveness and accountability in financial management will provide a stronger revenue base to finance a switch in expenditures toward high-priority social sector work.”
The programme will also seek to create a conducive environment for private sector development with a shift of government away from direction involvement in operations toward promotion, facilitation and support for public-private partnership.
“Creating job opportunities in the private sector, including rural areas where the majority of the poor live, is key for accelerating growth and sustained poverty reduction”, said Marshuk Ali Shah, country director at the ADB’s resident mission.
He said Pakistan had initiated substantial governance reforms over the past three years with the devolution of power. As primary responsibility for service delivery in many areas now lies with local governments, provincial governments have to adjust a new role with a focus on policy setting.
But despite many initiatives to develop economic and social sectors, social indicators are lagging behind those countries with similar income levels and the incidence of poverty today is higher than a decade ago, he added.
The social indicators of Punjab, the most populous and economically significant province of the country, are reflective of the country as a whole.
“Any progress that can be achieved in Punjab could have far- reaching impact on the country and its people as a whole”, Mr Shah added.
An ADB loan for the first sub-programme — $200 million from its ordinary capital resources - carries a 15-year term, including a grace period of three years. Interest is determined in accordance with ADB‘s LIBOR-based lending facility.
It is complemented by a technical assistance loan of $4 million to support public resource management reforms in Punjab, including tax and revenue administration, strategic planning systems, human resource management and land registration.
Provincial planning and development department is the executing agency for the programme, which will be carried out over five years with each sub-programme lasting one to two years. The sub-programme 1 will cover the period up to December 31 2004.