ISLAMABAD, Feb 18: The World Bank has indicated its readiness to offer $1.8 billion during the next three-year period to effectively help implement the Poverty Reduction Strategy Paper (PRSP) currently being finalized by the government.
Official sources told Dawn here on Tuesday that the World Bank plans to extend $600 million every year during 2003-05 on International Development Association (IDA) terms, which are generally considered to be highly concessional.
Senior government authorities have been informed that the World Bank will also resume lending under International Bank for Reconstruction and Development (IBRD) terms from the financial year 2004-5 with a view to providing maximum resources to improve social indicators and reduce poverty in all the four provinces.
Sources said that despite the building up of foreign exchange reserves of over $9 billion, the government needed external lending on concessional terms specially after the conclusion of the IMF’s three-year $1.3 billion Poverty Reduction Growth Facility (PRGF) programme.
Prime Minister Mir Zafarullah Khan Jamali, sources said, was informed by Finance Adviser Shaukat Aziz on Monday that the PRGF would be the last IMF programme in Pakistan. However, he said, development assistance would continue to be sought from the World Bank and the Asian Development Bank (ADB) on 0.7 per cent to 1 per cent mark-up rate.
Sources said Pakistan required external resources to the tune of about $6 billion to fund the new poverty reduction strategy, for which the government had requested increased access to “IDA13 allocation” from the World Bank.
Nonetheless, the World Bank wanted the federal and provincial governments to initiate civil service reform, including pay and pensions adjustments, rightsizing by eliminating positions according to skill requirements at the provincial departments and in autonomous and semi-autonomous bodies.
The government has been assured that the World Bank’s support will also focus on deepening banking sector governance reforms, strengthening the regulatory and supervisory capacity of the State Bank of Pakistan. Maximum technical support will be extended for privatizing the state sector including the banks.
In this behalf, sources said, the bank expected that the new government will strive to disinvest major utilities, including PTCL, PSO, KESC, Habib Bank and the National Bank by December 2003.
Sources said that the government needed WB support to meet the twin challenges of reviving growth and reducing poverty. And this job, they said, required rapid economic growth that was equitable in nature and broad-based in its reach.
According to the PRSP likely to be finalized before June this year, the government was committed to reducing the burden of poverty and was therefore assigning great importance to improving the public service delivery mechanism. Resource constraints are just one of the maladies that afflict Pakistan. A weak, ill organized, and inadequate public service delivery system in the past neutralized best of plans and huge amounts of resources. The issue of improving governance, the PRSP believes, is central to fighting poverty, and thus cuts across all the elements of Pakistan’s poverty reduction strategy.