THE government is working on a second five-year Poverty Reduction Strategy Paper(PRSP-II that places increased emphasis on employment and institutional-building. It is targeting an uplift programme requiring an investment of Rs1500 billion.
The strategy paper would draw upon the experience in implementing PRSP-1 which did not prove to be an unqualified success. It provided for a total expenditure of Rs1200 for a wide ranging projects and schemes aimed at reducing poverty.
Notwithstanding 10 percentage point poverty reduction - from 35 to 25 per cent - repeatedly being claimed by the government, concerned officials admit privately that “not much has been achieved during 2001-2005” (PRSP-1 period) in terms of significantly reducing poverty and generating new jobs.
The international financial institutions (IFIs) are believed to have agreed to fund the PRSP-2. They are expected to provide about $8 billion (WB $6 billion, ADB $1.8 billion and UNDP $200 million) over the next five years.
However, all the three donors are believed to have made it clear to the government that the PRSP-2 must be backed with strong monitoring as well as capacity development, including data collection and analysis to assess the full impact of the programmes.
The system should have new institutional mechanisms for regular/period monitoring and evaluation of poverty reduction expenditures and corresponding outcomes indicators at the federal, provincial and district levels.
These institutional arrangements are presently being evolved and will be finalised after consultations with provincial governments. Key outcome indicators have also been suggested while final benchmarks and targets will be set after having discussed with national and provincial statistical agencies, federal line departments and provincial governments.
The PRSP-2 is being formulated in the light of the United Nations Millennium Development Goals (MDGs) and its objectives will be achieved by strengthening the private sector particularly services and industry sectors. In this behalf, sectoral analysis are being conducted to make the PRSP-II a success.
The UNDP has hired the services of former director of Pakistan Institute of Development Economics (PIDE) Dr A.R. Kamal to help prepare recommendations for effective monitoring outcomes which will be incorporated in the final draft of the PRSP-2.
The UNDP is believed to have proposed that the government to improve the quality of living standard surveys, with the help of independent economists and financial experts. The UNDP has also called for “sustained reduction in poverty and inequality in the Pakistani society” by ensuring proper and adequate assets distribution among the less privileged.
The local officials of UNDP and Dr Kamal are currently meeting all the stakeholders including the four provincial governments to work out an improved strategy.
Since education plays an effective role in reducing poverty, the government has been advised by the lending agencies to earmark funds equal to four per cent of the GDP on education against 2.5 per cent currently being spent.
“We hope that developed countries would fulfill their promise of offering 0.7 per cent of their GDPs to help cut the world wide poverty considerably”, a concerned official said, hoping that the government would allocate matching funds to meet PRSP-2 targets.
MDGs seek to cut poverty by half, net enrolment in education by 100 per cent, reduction of infant mortality by 80 per cent by 2015. Similarly, these goals include targets for reduction in TB, HIV, malaria, hepatitis, and for extending clean drinking water and sanitation to the people.
How would the government generate its part of the funding for PRSP-2 is an important question especially keeping in view the fall in tax-to-GDP ratio from 11 per cent to 10.6 per cent and rising fiscal deficit.
The government has been advised by the donor agencies to complete the restructuring of the Central Board of Revenue (CBR) as early possible so that leakages could be removed and fresh funds collected for spending on uplift programmes. Currently, various economic indicators are weakening.
The PRSP-2 is expected to demonstrate the need to closely monitor the effectiveness of government policies and track outcomes of programme for poverty reduction.