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Launching of poverty alleviation programme

  1. Pakistan's economic scenario
  2. Industrial Restructuring Corp
  3. Poverty alleviation programme
  4. The factors of low yield

Government was also asked to widen its tax base to collect more money to be spent on the PRP

From Shamim Ahmed Rizvi, Islamabad
Feb 07 - 13, 2000

The government of Pakistan which has fulfilled almost all the condionalities of the International Monetary Fund (IMF) for continuation of financial assistance under ESAF programme is now seriously thinking to seek a change in the initial agreement signed with IMF to refix fiscal deficit at 4 percent during the current year instead of 3.3 percent to enable the government to manage about Rs. 40 billion for its poverty alleviation programme.

The present Government is highly keen to launch a programme to combat poverty the level of which has been rising rapidly during the past few years. Finance Minister Shaukat Aziz on Thursday presided over a meeting which discussed the launching of poverty reduction programme (PRP). A report prepared by the director of the Pakistan Institute of Development Economics (PIDE), Dr. A.R. Kamal, on the PRP came up for discussion.

Official sources said the meeting had been told that few aspects of the agreement with the IMF would have to be renegotiated so that funds could be managed for the PRP. Initial recommendations were made to mange Rs. 40 billion for undertaking the PRP. However, experts informed the meeting that no funds could be managed if the IMF was not convinced to stop insisting on achieving what was termed a "very difficult task" of achieving 3.3 per cent fiscal deficit during 1999-2000.

Sources said the government was also asked to widen its tax base to collect more money to be spent on the PRP. "Different scenarios were given to the government at the meeting and let us see how the higher, authorities respond to them," a participant said. He said the government was urged to seek additional resources from the World Bank and the Asian Development Bank for the programme.

The meeting discussed the PIDE report which had recommended basic strategy for "attacking" poverty. The report pointed out that the incidence of poverty was higher among the rural population and was linked to the literacy conditions of health and ownership of assets. "Thus an approach that addresses all these dimensions of poverty will have to be adopted," it proposed.

The meeting was told that the economic revival had included a programme of special development schemes of small public works in most poor urban and rural areas, a programme of food supplement scheme and the establishment of a micro-credit bank. It was pointed out that the government was making poverty reduction the basic objective of the economic framework.

Earlier the Secretary General of Ministry of Finance, Mr. Moeen Afzal, presided over here on Wednesday a meeting to finalize the proposed poverty alleviation strategy. Representatives of the World Bank, the Asian Development Bank, the IMF and the United Nations Development Programme (UNDP) also attended the meeting. The meeting was told that the government was planning to spend over Rs. 40 billion to alleviate poverty throughout the country, specially in the rural areas, by creating small jobs and providing various skills to unemployed youth. The Director of the Pakistan Institute of Development Economics (PIDE), Dr. Kamal, gave a briefing to the participants over the issue. He said that the government was shifting its thrust from social sector to alleviating poverty.

The sources said that the Secretary General of the Ministry of Finance urged the donor community to help the government to end poverty in Pakistan by offering additional resources. Nevertheless, the sources said, the donor community was of the view that the government should strengthen SAP instead of seeking increased funds for alleviating poverty. The representatives of the donors, however, were convinced that time had come when the government should concentrate more on removing poverty rather than traditionally putting funds into social sector.

According to a report released by the World Bank last month, efforts for poverty alleviation programme have stalled at the turn of the century while poverty level was increasing in all the developing countries including Pakistan. The poverty profile of Pakistan has deteriorating in recent years. The implementation of various structural reforms and adjustment programmes had increased the number of poor in the country. Despite a comprehensive Social Action Programme (SAP), efforts to eradicate poverty have embraced little success. The World Bank had approved a $ 90 million credit to support the Pakistan Poverty Alleviation Fund (PPAF) recently. The deposed Sharif government established the Fund, with a total value of $ 107 million. Mr. Shahid Javed Burki, former Finance Minister of Pakistan, who recently retired from the World Bank as its vice President in a lecture presented a very gloomy future for Pakistan in this respect. He said in the year 2010, Pakistan will have a population of 170 million, and 80 million of them, or 47 per cent, will be living below the poverty line.

It means that instead of the rosy vision 2010 held forth before us by Ahsan Iqbal, Deputy Chairman of the Planning Commission during Nawaz Sharif government, we have a vision of horror and squalor. Many of the people will be deserting their villages in search of largely non-existent jobs in the metropolitan areas, crowding the congested cities and making urban life more chaotic and excessively violence prone, Mr. Burki estimated.

Absolute poverty, calculated on the basis of caloric intake, had decreased from 46.53 per cent in 1969-70 to 17 per cent in 1987-88 but has since then risen to 37 per cent. The situation is expected to get far worse in the years ahead as Mr. Burki's projection indicates. Surely if the poor 20 per cent of the people get just 7 per cent of the national income, while the rich 20 per cent get 44.8 per cent of that income, stark poverty has to be very extensive. In fact, the share of the poor has been decreasing while the share of the rich has been increasing according to official figures. The share of the rural poor in 1979 was 8.3 per cent and dropped to 7 per cent by 1992-93, and in the same period the share of the urban poor fell from 6.9 per cent of the national wealth to 6.1 per cent. Meanwhile, the share of the rural rich jumped from 41.3 per cent to 44.8 per cent and of the urban rich inched up from 48 per cent to 48.9 per cent.

All this has happened in spite of the commitments of successive governments to a welfare or Islamic Welfare state, the eroding Ushr and Zakat and eight five-year plans. Hence successive findings of the Human Development Report for South Asia insist the benefits of the development plans have not reached the common man, who appears to be worse for all that.