While appreciating the sustained pace of Pakistan's reforms, the World Bank has described the slow growth rate, tax administration reforms and restructuring of the power and agriculture sector as major challenges facing the Pakistan economy.

James D. Wolfensohn, President of World Bank, made these observations in a meeting with Finance Minister Shaukat Aziz in Washington on last Monday, Aziz is visiting the United States to attend the annual meetings of the Bretton Woods Institutions. The World Bank President, commended Pakistan for staying the reform course while urging greater efforts to ensure that the benefits reached the country's poor people.

The Finance Minister Shaukat Aziz made an impressive presentation of Pakistan's case during his meetings with various heads of Bretton Wood Institutions including World Bank and the IMF. The Finance Minister said that the government's basic premise is that the benefits of economic reforms must reach the people if they are to be useful and sustainable. This noble theme can be translated into reality only when economic growth is accelerated, new employment opportunities created and greater efforts made to reduce poverty. The task is both arduous and enormous, he added.

Addressing the annual meetings of the fund and the bank, Shaukat Aziz underscored the need of higher concessional flows to the developing countries, and more market trade access. He said it would be useless if only IDA resources were offered to the developing countries, without improving their repayment capacity through improved international trade.

On poverty, he said: Our basic premise is that the benefit of economic reform must reach the people of they are to be useful and sustainable." For this he urged the "development partners of Pakistan" to provide more concessional aid flows. He said: "Our vision of Pakistan is a Pakistan that is democratic, progressive, prosperous and where its people lead lives in peace and justice, consistent with our Islamic heritage."

According to an official announcement, the World Bank Chief under scored the need of steadfast implementation of structural reforms, while urging greater efforts to ensure that the benefits reach the country's poor. The latest indications suggest that poverty was on the rise in Pakistan since 1999. Multilateral agencies believe that suffocating sanctions of May 1998, in response to nuclear tests, and failure of growth due to drought and other macroeconomic difficulties, and painful stabilisation measures had aggravated poverty profile of the country. Almost one third population lives below the poverty line of one dollar a day.

Wolfensohn observed that Pakistan needs to accelerate GDP growth rate to 5 per cent. Experts believe that higher growth rate was badly needed to dent the poverty. However, the bank president maintained that the improved investment climate would be a prerequisite for that to happen. In this regard, Wolfensohn offered support from the bank's private sector arm, the International Finance Corporation (IFC).

The bank president observed that growth remained slow in Pakistan, and restructuring was an ongoing challenge in the water and power sectors, and in the agriculture. Recently, the bank president made strong statement about the Water and Power Development Authority (Wapda). He said there were imbalances in the power tariff in Pakistan due to large line losses of 26.5 per cent by Wapda.

He said that the many sectors were being subsidised, particularly the richer segments of the society who were in a position to foot the bill. He indicated that a new tariff policy was under consideration of Pakistan, which according to him would be implemented by Pakistani "Prime Minister and Finance Minister possibly after October polls. This tariff rationalisation policy would basically try to eliminate cross subsidies.

Counting the "runs on the board", Wolfensohn said poverty reduction programme was on track, debt reduction efforts were making good progress, and privatisation of the United Bank, to be followed by Habib Bank were encouraging. He however, observed that reforms in tax administration and privatisation of the oil and gas moving ahead.

"Pakistan has been at work in a very challenging environment both internally and due to several big external shocks. The country is now beginning its return to democracy, and we hope that al citizens remain committed to the restructuring programme on which there restill much work to be done", said Wolfensohn. He said for each and every citizen of Pakistan to live in peace and security, the benefits of today's efforts must be deepened and sustained, and must reach the very poorest.

"The Bank remains your partner as long as you stay the course on the road to good governance and an improved standard of living for all," he told the Finance Minister. The Minister assured the bank of continued implementation of reforms.

What clearly emerges from the outcome of the meetings of Pakistan's Finance Minister with donor agencies is that while donors will like to see full and continued implementation of the reform agenda, the government will need to make determined efforts to ensure that poverty is reduced and living standard of the people improved on a sustained basis.