The World Bank would provide $1 billion assistance
(soft loans) annually for next three years to help fight poverty and
achieve economic and social goals in Pakistan. The Asian Development
Bank (ADB) has already pledged almost the same amount for the same
The loans will be made available from International
Development Association (IDA) the concessional lending arm of the World
Bank under IDA-14. The IDA-14 will begin from July 1, 2005 for a
three-year period at the end of existing IDA-13 in June this year.
According to World Bank President, James D. Wolfensohn, Pakistan's
economy was set to grow, but it still faces some key challenges,
including rebuilding investors' confidence, improving the social
indicators and infrastructure development. Wolfensohn was on three-day
visit to Pakistan.
"The purpose of a visit was to ensure that the
World Bank was in line with the government in terms of a billion dollar
per annum programme planned for next three years," said Wolfensohn
at the conclusion of visit.
He said fighting poverty remains the core challenge
for the country, while rampant corruption was still a problem for
Pakistan, like many other countries. He advised Pakistan to improve its
performance in the area of poverty reduction, which is 30 percent
A written statement issued at the press conference
said that the World Bank President appreciated Pakistan's economic
achievements and its bold reform programme. He also urged to avoid the
risk of complacency that sets in with success, and emphasized that the
challenge now for Pakistan is to sustain reforms in order to accelerate
growth and achieve the millennium development goals. He said
"Pakistan's must stay on course until the benefits of its
achievements reach the vulnerable sections of the society including the
very poor, women, children and the disabled. The country however, cannot
deal with poverty without rapid deal, without rapid growth, and Pakistan
has done very well to accelerate its growth all across the macro
economic front. This, he said, would enable it to concentrate on
improving social outcomes.
The World Bank President emphasized that Pakistan
still has a long way to go in terms of achieving its human development
goals, and that a renewed focus on better social service delivery, and
empowerment of women will allow Pakistan to contribute to the
achievement of the millennium development goals. The World Bank Chief
said he was particularly impressed by the performance of the reform
During his stay in Islamabad, the World Bank chief
met President Pervez Musharraf, Prime Minister Shaukat Aziz, and the
PM's advisor on finance, economic team and key members of the cabinet.
He also called on Chief Minister Punjab in Lahore besides meeting
Governor State Bank and representative of private sector.
Sharing the outcome of his meetings in Islamabad, he
said that 7 percent growth by a country, which was around three percent
a few years back, was quite an achievement. He added that with continued
implementation of the priorities laid down in Pakistan's Poverty
Reduction Strategy; Pakistan was now ready to unleash its potential
ensuring the benefits reach the most vulnerable, significantly reducing
poverty and improving living standards for the population.
During his previous two visits, first during the
Nawaz Sharif's government and then in 2002 during President Musharraf's
rule he praised Pakistan's policies. The Bank maintains that Pakistan
has consolidated "its remarkable economic turn around with growth
increasing above 6 percent, the debt burden falling substantially and
poverty related spending rising steadily. The education and health
spending in Pakistan, both as a ratio to GDP and per capita, is among
the lowest levels in the world. Although social and poverty related
expenditures have been raised to 4.6 percent of GDP in 2003-04, from 3.8
percent of GDP in 2001-02, they remain short of requirements to dent the
A government sample survey conducted in early 2004
suggests that poverty has fallen over the last three years. The survey
showed a decline by 4 percent in the poverty rate, to 23 percent. The
last official household survey in 1998-99 showed 32.1 percent poor in
"The results of this survey are not fully
comparable with those from earlier household surveys, as its sample size
was much smaller and the poverty line may have been
underestimated," a report of the International Monetary Fund said.
The IMF data provided some sectoral indicators showing no major change
so far in the social sectors. Many intermediate outcome indicators for
the health and education sectors have yet to show significant
improvements. Real wages in the manufacturing sector have declined by
7.5 percent in real terms since 2000-01. Pakistan is still ranked low in
the 2004 UNDP human development index, according to IMF's data.
"Overall, poverty remains widespread and Pakistan faces a major
challenge in trying to meet its Millennium Development Goals (MDGs). The
official unemployment rate 7.7 percent has more than doubled over the
last 15 years."
"If the country is providing soft loans, through
the concessional lending arm of the World Bank (IDA), it could further
accelerate the process of economic development in the country,"
Prime Minister Shaukat Aziz recently told the Executive Directors of the
Bank. Pakistan needs enhanced IDA allocations to meet funding
requirements for the social sector development, he said. "Pakistan
needs at least $20 billion new investments in the water and power
sectors to avoid blackouts and food shortages in the near future but
such levels of resources are not available so far."