ISLAMABAD, March 24: The International Monetary Fund (IMF) has urged the government to increase the poverty-related expenditure from Rs160 billion to Rs180 billion in the next budget.
Official sources told Dawn here on Monday that the budget for 2003-04 will witness a substantial increase in the allocation for tackling poverty.
The government has agreed with the IMF that there will be a minimum Rs20 billion increase in the poverty-related expenditure during the next financial year, the sources said.
However, no decision has so far been taken to enhance the Public Sector Development Programme funding which received an allocation of Rs140 billion in 2002-03.
The government will create more fiscal space to offer increased funds for poverty-related expenditure, especially by improving the income of the Central Board of Revenue (CBR).
The government has no plans to impose new taxes in the budget for 2003-04, and that new resource mobilisation will be ensured by enhancing the present tax net.
The IMF is said to have raised objection on the release of less development funds during the first eight months of 2002-03.
The government informed the Fund officials that the Chief Election Commissioner had imposed a restriction on development activities in mid-September last year on the complaints of opposition parties due to which virtually no funds could be utilized during the election and after.
“This development work remained suspended till December 2002,” a senior finance ministry official said.
Nevertheless, he said, the development expenditure was up by 40 per cent during the first eight months of 2002-03 compared to the corresponding period last year. “Everything was on hold during the transition period and that is why there was not much spending on development activities,” the official said.
The IMF also wanted the provincial governments to substantially increase poverty-related expenditure at their level during the year 2003-04.
The World Bank, IMF and the Asian Development Bank (ADB) believe that the government of Pakistan faces many challenges to removing growing poverty.
“The level of poverty in the country has not appreciably changed in the ten years preceding 1999, despite having fallen in the previous ten,” says the World Bank’s document, “Pakistan Poverty Assessment”.
It said the educated and well-off urban population lives not so very differently from their counterparts in other countries of similar income range, or even of their counterparts in Western countries. However, the poor and rural inhabitants of Pakistan are being left behind. This is shown by many social indicators in ways that, unless sharply improved, will leave Pakistan falling further below other countries’ performance in the future.
So far the government has released various social indicators, showing improvements, especially in education, health and per capita income. But the government has not come up with the latest poverty-related figures and data, reportedly due to not having any improvement in them.
The Economic Advisor to the Ministry of Finance Dr Ashfaque Hasan Khan is currently finalizing the details of a new Pakistan household survey.
The representatives of the multilateral agencies have been saying privately that increase in poverty could not be stopped during the last three years, and that it continued to increase beyond 1998.
The World Bank report maintained that between 1984-85 and 1987-88, substantial poverty reduction took place, as a result of strong growth performance that led to sizable increases in average consumption, along with reduced inequality in rural areas.