If adequate private sector investment is not forthcoming for the much-needed job creation, the government should expand its public sector investment for the short term, says the Asian Development Bank.

Simultaneously the bank voices the fear the government may not be able to implement the Annual Development Programme of Rs202 billion in this financial year itself because of its proven inability to spend that large a sum in time productively.

Its fear springs from the fact that after the end of nine months of 2003-04 only 48 per cent of public sector development allocation of Rs160 billion had been spent. In fact, the development spending in the years preceding that out of the budgeted amount was far less. In fact, half the sanctioned amount had been spent in the past in the last quarter of the year which resulted in misspending and waste of public funds.

At issue is the government's preview incapacity to spend the sanctioned amounts productively in good time, or as budgeted, to complete major targets in time. Delayed completion of projects enhances the cost, delays the commencement of production and job creation according to the capacity of the projects. Such delays are totally impermissible in a country with a massive unemployment problem and low economic growth until very recently.

Proful C. Patel, vice-president of the World Bank for South Asia, has made a special study of the problem of capacity-creation for development in Africa and Asia and wants countries like Pakistan using foreign aid to increase their capacity to use aid and their own funds for rapid development.

The donors now want major changes in Pakistan's policies to combat poverty, unemployment and illiteracy, and promote sustainable economic growth. And they are willing to give larger loans than the increasing funds they have been recently providing.

The World Bank, for example, is ready to provide funds for a five-year infrastructure development plan which has been warmly welcomed by Shaukat Aziz, now prime minister. And the Asian Development Bank has offered $2 billion to finance a highway project linking Pakistan, Afghanistan and Tajikistan. Although Pakistan has ceased negotiating for more IMF assistance other financial agencies are ready to help Pakistan in a big way if it will make the right use of the development funds and complete projects in time.

In the series of economic committee meetings before presentation of the budget in June firm decisions were taken to have more periodic reviews of the progress in implementation of the projects and programmes and let not the development funds sanctioned lapse, as has been happening for long or the projects lag far behind the targeted time for commencement of production.

How far these reviews by these committees eliminate the delays in the completion of the projects and commencement of production remains to be seen. As far as Shaukat Aziz is concerned he is very serious as a banker knows the value of time gained or lost.

Had the World Bank instead of relying only on the federal government to route its loans through, is giving the loans direct to the provinces like the Punjab, Sindh and North West Frontier Province. The loans becomes cheaper too for the provinces instead of the centre charging too heavy an interest rate on them.

The problem arises when the economic affairs ministry which negotiates the loans is having to deal with several other federal ministries and then the provincial governments, which has to deal with the local administrations for plots of lands etc.

And now to add to them has come the district governments with their varied political pulls and local schisms. But Shaukat Aziz as the finance minister and prime minister has to cut through much of such cobwebs and gain time.

Few may want to resist him as prime minister compared to what they did when he was only finance minister, always trying to cut financial corners to save the scarce funds.

The donors now want overhauling of the ministries dealing with economic development. But now the ministries have been split much further and the divisions may even total 50 eventually.

While the finance ministry has been divided into six divisions how effective they will be for speedy economic development remains to be seen. I hope the ministers in their inflationary numbers do not pull in different directions with the ministers of state, too, having tussles with the cabinet ministers.

Mr. Marshuk Ali, resident representative of the ADB in Pakistan, says the country faces formidable challenges for a sustained 8 per cent economic growth annually. A country dependent on agriculture a great deal is affected by the weather.

Water is a major problem. High world oil price can affect its economic growth. And how Pakistan's textile sector, which accounts for 66 per cent of the exports, fares in a textile quota-free world after the end of the year remains to be seen. 2005 onwards is full of challenges and opportunities which will be marked for the survival of the fittest, which we have to become against all odds.

The ADB wants the second generation reforms to be implemented, particularly in the areas of industry, civil services and the police and devolution. These are tough areas to reform but they have to be reformed.

The donors want Pakistan's basic institutions to be strengthened and the quality of their performance improved vastly. All that is a part of the good governance everyone has been wanting or Mr Shaukat Aziz himself has promised along with accountability.

The macro-economic sector has been greatly improved compared to what it was before 1999 or in the lost 1990s, as usually described. But the people of a country in which a third live below the poverty line of a dollar a day have not benefited or employment opportunities improved significantly.

It is now recognised by the donors that a high economic growth rate alone cannot eliminate poverty. Its filtering down effect may take a long time in reaching the poor. And in a country with too many carpet-bagging middlemen it may hardly ever reach the poor, more so when the population goes on increasing rapidly. In fact, there is now a fear of an increase in poverty before sustained economic growth and the welfare measures can bring that down.

After Shaukat Aziz won a vote of confidence in the National Assembly he made a long speech; but he did not make particular mention of fighting the pervasive corruption which adds to the agonies of the poor and makes them feel poorer and totally deprived. But he did speak of accountability in all spheres of life. He has to make it truly effective, and far more than symbolic. Political resistance stands in the way of Kalabagh Dam.

Its proponents don't seek a compromise either. Ghazi Barotha has been completed after a long delay, and at a higher cost, and after it had produced some unsavoury stories.

The feasibility study for Kalabagh Dam was undertaken long after a large loan from the World Bank had been taken. Unutilised loans cost Pakistan half a per cent interest. And when the aid projects are getting larger and the loans obtained much bigger, such non-utilisation charges become too heavy as they accumulate.

The fact is we have given up the so-called mixed economy and opted for the market economy following the proddings of the donors and reflecting world trends. But the market economy in a developing country makes the rich richer, and it takes a long time for its filtering down effect to reach the poor when there are plenty of forces to interrupt that much-too-slow flow.

Prime Minister Shaukat Aziz should be able to prod his business friends to charge a lower rate of profit than the high profit rates they are famous for in Pakistan. The low profit should prevail both in agricultural and industry as well as the services.

Big business and industry cannot have it all their way all the time. And if the poor are not given a break now they may take to more crimes and eventually to acts of terrorism as the world is witnessing now.