. .

World Bank Development Report 2000-2001

The World Bank wants the high-income countries to concentrate on debt relief

Sep 25 - Oct 01, 2000

About 85 per cent population of Pakistan is living on an income of 2 dollars a day which according to world standard is below poverty level. About 31 per cent of the total population are living in abject poverty as their earning is not more than a dollar a day.

This horrible situation has come to light from a World Bank report 2000 whose theme is "attacking poverty" and which was launched in Islamabad last week. According to the report although the world has experienced phenomenal growth over the last decade the condition of poor has worsened around the world. The average per head income in the richest 20 countries is 37 times the average of poorest 20 countries. This gap was about 18 times about 40 years back.

The report was released by the local World Bank authorities here at a function in which Finance Minister Shaukat Aziz was the Chief Guest. Others who addressed the function included John Wall, Chief, resident World Bank mission in Pakistan and other officials. According to the report the problem of poverty has grown so immense that out of the world's six billion population, 2.8 billion or 44 per cent are living in abject poverty, on less than two dollars a day, and 1.2 billion or 20 per cent on less than one dollar a day. Although 43 per cent of the impoverished people are concentrated in South Asia, large pockets of utter destitution exist in Africa and Latin America.

The poverty statistics for Pakistan depict a grim picture. According to the reports more than a third (34 per cent) of Pakistan's population lives below the poverty line while our neighbours in the subcontinent are in a worse state. Compared to the international poverty level, 31 per cent of our population lives on less than one dollar per day and 85 per cent on two dollars a day. About 55 per cent Pakistanis of over 15 years of age are illiterate, infant mortality is 91 per 1,000 live births or 10 times the level of advanced countries, while about 44 per cent have no access to sanitation and one-fifth are still without clean drinking water.

During the last few years, there has been a lot of concern at the international level about the growing poverty in the underdeveloped countries. The phenomenon has been highlighted to the extent that the focus of development efforts has now shifted from the main macro-economic aggregates like growth rates and per capita GDP to the reduction of poverty. The World Bank has always been in the forefront to analyse the problem dispassionately and publicise it the world over. The World Development Report 2000-2001 with its main theme "attacking poverty", is yet another effort to highlight the issue and suggest ways to tackle it on a priority basis. The report draws heavily on the research studies and consultations with various governments, NGos, civil society groups, universities and private business groups.

The Report suggests a number of steps to be taken by the developed countries. The World Bank wants the high-income countries to concentrate on debt relief and more effective development assistance to the developing countries. Besides, efforts are needed in other equally important areas like expanding the access to the markets of developed countries, enhancing global financial stability, narrowing the technology gulf and promoting public goods that benefit the poor such as vaccine for tropical diseases, agricultural research and combating HIV/AIDS. Many developing countries feel that while they are asked to liberalise their trade regimes, the developed countries by their policies and clout in the global economy are putting them at a disadvantage.

The Report and the World Bank efforts at various forums to attract the attention of policy makers in the rich countries towards the phenomenon of poverty are definitely commendable. The Bank's analysis is objective and backed by facts and figures and, therefore, cannot be brushed aside easily. As such, its impact is universal and almost evident in certain instances. For example, the expanding activities of the multinationals, the WTO negotiations and overall globalisation efforts are meeting with a lot of resistance even from the citizens of highly developed economies. Such a movement was unthinkable in the rich countries only a few years ago. In all probability, now the world conscience would not allow a raw deal to the poor people in the developing countries. Another important development related to this awareness has been the provision of built-in mechanism in the programmes of the multilateral institutions to protect the poor. For instance, the Poverty Reduction and Growth Facility (PRGF) introduced recently by the IMF has been particularly tailored towards this objective. Also, there are initiatives to help the Highly Indebted Poor Countries (HIPC) by reducing their debt burden.

What seems to have been left out of consideration is the need to correct the problem of excessive maldistribution of incomes and assets not only among nations but within nations. The traditional measures cannot promote this objective. For example, in Pakistan devolution of power and establishment of local governments alone would not empower and enable the poor to increase their participation in decision-making unless the unjust and exploitative land tenure system is drastically reformed, The possibility cannot be ruled out that the existing structure of land holdings may enable the dominant families in the rural areas to further consolidate their position, strengthen the exploitative system and intensify the process of pauperization.

Speaking at the launching of the World Development Report 2000-2001; Attacking Poverty, the World Bank Chief in Pakistan expressed concern over the rising levels of poverty in Pakistan during the last decade. Like, he said, this has happened due to "bad governance" which could also be a rubric for corruption in high places, political instability, and unthinking resort to policies that, instead of creating more employment opportunities, rendered many jobless, The Bank's official also pointed out that the government has serious resources constraints when he said that Pakistan's total budgetary resources are 15 per cent of the GDP. Out of these, he explained five per cent goes to civil administration, four per cent to defence, and the rest to debt servicing. And, therefore, "nothing is left for developmental purposes. "The desirable budgetary resources-GDP ratio would be 21-22 per cent, which is average for other countries of the region. But that goal is not achievable unless something drastic happens.

Speaking at the occasion, Finance Minister Shaukat Aziz reiterated Chief Executive General Pervez Musharraf's plea to allow repayment of debts through government's expenditure on poverty reduction. "We are not asking for write off, but be allowed to use the amount for fighting the curse of poverty, the minister added. According to him, the proposal made by the Chief Executive at the millennium summit received positive response and the minister hoped for some follow-up action.

Two other world development reports focused on poverty reduction, albeit unsuccessfully. Shaukat Aziz said that the government had formulated an aggressive poverty reduction programme which could not be financed by the country alone. Therefore, the government sought donors support.

He said the implementation and achievement on the ground was more important than the programme. Referring to the government efforts to fight poverty, the minister said the government has completed interim poverty reduction strategy to develop a viable strategy to attack poverty. The final articulation of our strategy would come in the form of poverty reduction strategy papers (PRSP) a document prepared with wider consultation with the donor community, he added.

Poverty is a complex phenomena and not a single cause could explain the true condition of the poor income, access to education and health, environment, society and institutions of governance all have a role in explaining the state of poverty. Secondly, although the world has experienced phenomenal growth over last 50 years, the condition of the poor has worsened. To quote from the report "The average income in the richest 20 countries is 37 times the average of the poorest 20 a gap that has doubled in the past 40 years.

"Clearly, something has gone wrong with the way the objective of growth has been pursued" he added. Thirdly, and perhaps the foremost, the strategy to reduce poverty will have three dimensions, including opportunity creation, empowerment facilitation and security enhancement. Unless the three-dimensional approach was adopted, the poverty alleviation efforts would remain partial and the problem of poverty might actually exacerbate, Shaukat said.

Shaukat said that our understanding of poverty and its dynamics has greatly enhanced over the years, and also appreciation of its ill effects for the peace of the civil society. That is why development has become more people centered as opposed to growth centered.

But that is not sufficient to attack poverty. The role of resources remains critical and their availability or otherwise would determine how far the PRSP policies would be effective in attacking poverty. Talking about the report, he said the report was fully conscious of this challenge and has exhorted the developed world to play its role to achieve the poverty reduction goals.