The Asian Development Bank (ADB) will provide 2.5 to 3
billion dollars in the next 5 years to Pakistan to assist it in its poverty
reduction efforts. The loans will be a part of poverty reduction strategy being
finalised by the Bank and will be disbursed at the rate of 500 to 600 million
dollars a year depending on the performance.
This was announced by Yoshihiro Iwasak, Director Programme
department ADB at the regional office of the Bank in Islamabad on Monday.
Resident Representative of the Bank Marshuk Ali Shah was also present. A poverty
reduction forum was also arranged in Islamabad to lay down the future road map
for the poverty alleviation.
Appreciating the reforms initiated by the present government
in different sectors the Director reiterated ADB's support for Pakistan "as
the Bank has itself become a stakeholder in the reform programme of
Pakistan". He expressed the hope that with effective implementation of its
reform agenda, Pakistan will soon attract foreign investment." Pakistan has
great potential for investment but it is a conducive atmosphere that is
required, he added.
The ADB director hailed the reforms undertaken by the present
government in areas of capital markets, export finance, trade and industry,
energy sector and micro finance but said the improvement in health and education
sector remain slow. While the economic growth remains the best bet in creating
an environment for poverty reduction it is equally important to invest the
surpluses created by economic growth in the human development, he remarked.
A team of ADB's currently visiting Pakistan to assess poverty
situation and identify areas where lending is required for poverty alleviation.
After completing assessment work the team will be signing an agreement with the
government by the end of this year, under which the loan will be given to
Pakistan.
ADB this year is preparing a new country strategy and
programme (CSP) to guide the ADB's development operations in Pakistan. The CSP
will reflect government's latest strategies for achieving economic recovery,
reduce poverty and improve worsening social indicators. In this regard ADB and
government has held consultative workshops in all the four provinces to develop
a poverty reduction plan.
The ADB director links the increasing poverty in Pakistan
with decline in average GDP growth rate from 6.1 per cent in 1980s to 4.4 per
cent in the 1990s and low human resources development. Weak governance he said
has also played a significant role in the persistence of poverty in Pakistan,
adding the poor fiscal and macro-economic management has constrained the
country's overall economic growth.
He continued that sustained and pro-poor economic growth is
crucial for poverty reduction and to achieve this the government must deal with
major macroeconomic challenges including broadening the narrow bases of
production, export, and taxation and bringing down the high debt. Similarly, he
said rebuilding of business confidence, refocusing on restructuring and
privatizing states-owned public enterprises and improving governance is also
important. Yoshihiro assured full support to government in its efforts to
achieve these objectives.
The ADB is identifying a number of areas in which it would
arrest Pakistan in reducing poverty which, at 30 to 35 per cent compares poorly
with other developing countries. The CSP would reflect the strategy for
achieving economic recovery and addressing the incidence of poverty and
worsening social indicators. The CSP will incorporate ADB's own poverty
reduction strategy for Pakistan which is being developed with extensive
consultation with stakeholders. The five pillars of the government strategy are
economic reforms, to promote growth, physical and social assets creation for the
poor, provision of social safety nets to protect the most vulnerable groups and
governance.
Elaborating the fields in which ADB could render useful
assistance, Isawaki said they held discussions for enhancing growth in
agriculture, small and medium industries as a source of income generation and
employment of the rural poor, helping SMEs and increasing their export
potential.
Earlier addressing the high level forum on "poverty
reduction" jointly organised by the Planning Commission of Pakistan and the
Asian Development Bank, Finance Minister Shaukat Aziz said that reviving growth,
restoring macroeconomic stability, reducing poverty and improving governance
would be central pillars of the government's economic strategy.
Shaukat Aziz said poverty alleviation would continue to be
corner stone of government's economic approach adding, this issue was on high
priority. To handle this problem, the Minister maintained, government was
pursuing two pronged strategy with major thrust on pro-poor growth and series of
directed measures to address this menace including Khushal Pakistan, Kushali
Bank, small and medium enterprises programme, revamping of Zakat regime etc.
Finance Minister said that while Pakistan needed financial
resources to support poverty alleviation programmes, it also needed to adopt
stabilization measures to reduce vital two gaps—the one between revenue and
expenditure and the current account gap.
