ISLAMABAD, May 27: The World Bank and the Asian Development Bank (ADB) have urged the government to improve its weak implementation capacity that “poses risks to the key reform policies and the overall reform agenda.” Informed sources told Dawn that both the donors said that implementation capacity remained weak at all levels of government and that it must ensure policy reforms in 2005-06 resulting in efficient, cost-effective, transparent and accountable resource management leading to higher equity and sustainability.

The World Bank and the IMF have also asked the government to improve its tax administration and to collect revenues efficiently, including the agriculture income tax. Pakistan was told that fiscal and financial reforms at the federal and provincial levels were vital to ensure the efficient and transparent flow of funds to lower tiers of the government.

Also the government, sources said, needed to continue the focus on the increased responsibilities of local government, which could be done by helping districts to prepare poverty-focussed investment strategies aimed at facilitating access to funds from the provincial finance commissions.

The sources quoting the officials of both the donors said that the first generation of macroeconomic reforms at the federal level in Pakistan has been largely successful, with countrywide macroeconomic indicators improving significantly during the last two years.

However, they said, continued efforts were required to ensure that the benefits of the improved macroeconomic outlook filter down to the poorest segments of the society. In this regard provincial resource management programmes have an important role to play given that key responsibilities related to poverty reduction, including social service delivery, were now largely the responsibility of the local government, with the provincial governments assuming a policy making and monitoring role in this regard.

The WB and the ADB have agreed to provide necessary assistance to help strengthen the implementation capacity and as a first step the ADB would extend its support for Punjab’s Resource Management Programme (PRMP). In this behalf, the ADB’s technical assistance (TA) amounting to $312,500 was being offered to develop broad-based policy reforms in Punjab.

Pakistan was told that if the weak implementation capacity was improved in Punjab during the next financial years, more financial and technical support of the two donors will be made available for other three provinces.

Policy reforms under the PRMP were divided into three thematic programme areas — fiscal and financial management, processes and institutions for pro-poor service delivery and private sector development.

Punjab’s PRMP emphasised provincial fiscal and financial reforms, resulting in such actions as the abolition of low yielding taxes, the simplification of tax structures, and the reduction of exemptions. These measures have increased revenue yields from provincial taxes substantially. Both the donors expected that the momentum generated by the PRMP was not lost and that further restructuring of key taxes would continue to take place.