Paul Wolfowitz pledges annual assistance of $1.5 billion to Pakistan for the next three years

Aug 22 - 28, 2005

Appreciating the economic reforms and the high growth rate achieved by Pakistan, World Bank President Paul Wolfowitz has advised the economic managers of Pakistan to maintain the present momentum. "High growth rate is part of what needs to be done and if Pakistan can sustain it, Pakistan can achieve what China and India have gained economically," he said.

Talking to newsmen in Islamabad on the conclusion of his visit to Pakistan, the World Bank chief observed that Pakistan's over 8 percent economic growth was quite impressive but its sustainability and equitable distribution of benefits to the poor was the real challenge. Earlier, after his meeting with Prime Minister Shaukat Aziz, the World Bank President had pledged annual assistance of $1.5 billion to Pakistan for the next three years for its various sectors of economy including water, power, energy and infrastructure. The visiting World Bank delegation led by its President also agreed to help Pakistan in recovering looted money.

Paul Wolfowitz was on his first visit to South Asia. He flew into Islamabad late on Sunday, and would also visit neighbouring India and Bangladesh. The former Deputy US Defence Secretary, who took over from James D. Wolfesohn in June, praised Pakistan's recent economic reforms for showing "real discipline".

In his arrival statement, the World Bank President appreciated the reforms programme and determination of the Pakistan government and assured all out support for its reforms programme. He said this is his first visit to South Asian region as President of the Bank and wished Independence Day greetings to the government and people of Pakistan. " I am delighted to be able to visit Pakistan very early in my tenure, and to be able to discuss how the World Bank can support the progress of this important country," he remarked. He added that Pakistan set itself on a course of economic reforms about five years ago. "It has sustained this course with real discipline and real results," he remarked. The World Bank President said: "I am eager to learn more and to see first hand how these reforms are beginning to make difference for Pakistan's poorest citizens- most especially Pakistani women and girls". He added that he had heard particularly about gains in education, and that girls are attending schools in grater numbers.

"But even with these early successes, the challenges are huge. I am here to see what the World Bank is offering is very best support. And my question will be: how can we better it," he remarked. "Pakistan has shown a real determination in its economic reform program; sustaining this effort, investing in infrastructure for the future, and in services for the poor across the nation, will test this determination even further", he added.

During three-day stay in Pakistan the World Bank President and members of his delegation met President General Pervez Musharraf and Prime Minister Shaukat Aziz, besides ministers and senior officials of various ministries.

The Bank also issued a country update on Pakistan explaining current economic and social situation. It says Pakistan's social indicators still lag behind countries with comparable per capita incomes. "Poverty remains a serious concern in Pakistan," the Bank observed in its country update. According to the rebased GDP numbers, the per capita income comes to $ 720; poverty rates, which had fallen substantially in the 1980s and early 1990s, started to rise again towards the end of the decade. Though complete data from the recent Integrated Household Survey is not yet available, it is evident that a large segment of the population lives in poverty. More importantly, differences in income per capita across regions have persisted or widened. Poverty varies significantly among rural and urban areas and from province to province, from 24 percent in urban Sindh to 51 percent in rural Sindh.

The Bank update maintained that Pakistan has grown much more than other low-income countries, but has failed to achieve social progress commensurate with its economic growth. Access to sanitation in Pakistan is 23 percent lower than in other countries with similar income. The educated and well-off urban population lives not so differently from their counterparts in other countries of similar income range. However, the poor and rural inhabitants of Pakistan are being left behind, the report added. Maternal mortality remains high at 450 per 100,000 live births. Gender gaps remain in schooling, largely due to the rural areas where only 22 percent of girls above age 10 have completed primary level or higher schooling as compared to 47 percent boys.

The World Bank delegation held a meeting with the Pakistani team led by adviser to prime minister on finance, revenue, economic affairs and statistics, Dr. Salman Shah. NAB Chairman Lt. Gen. Munir Hafeez, Minister of State for Economic Affairs Ms. Hina Rabbani Khar, Minister of State for Finance Omar Ayub Khan, Auditor General Younus Khan, NRB Chairman Daniyal Aziz and senior officials from ministries of Finance, Law and EAD participated in the meeting.

The adviser gave an overview of various structural and policy reforms, including police, judiciary and civil services aimed at good governance and eradication of corruption. The transfer of power at local level by way of devolution programme, including capacity building and human resource development also came under discussion. The NAB Chairman highlighted anti-corruption strategy and gave details of the money recovered from bank defaulters and others. He asked the WB president to help Pakistan recover money siphoned off abroad by some Pakistanis through illegal means.

The NAB Chairman also highlighted the role of his organization to create awareness and eradicate corruption. A transparent procurement policy has been devised to apply on all public sector procurements uniformly, NAB Chairman informed the visiting World Bank team.

He further informed about curbing money laundering, saying that anti money laundering law is under process and will be submitted to the appropriate forum for approval soon.

Assuring the bank's help, Paul Wolfowitz stated that the World Bank would assist in any way to stop corruption and assist Pakistan recover money sent abroad through illegal means.

Explaining salient features of the devolution programme, NRB Chairman Daniyal Aziz said, although the system is tantamount to upsetting the balance of status quo, it had empowered powerless as well as women by providing relief to people at the grassroots level. He asked multilateral donor agencies, including the World Bank, to support the devolution plan. Dr. Salman Shah added, "we are passing through a transitory phase and we are hopeful that the devolution will have firm roots with the passage of time."

Stressing the need to develop infrastructure in Pakistan with the help of multilateral entities, including the World Bank, Dr. Salman Shah said, "River Indus is a lifeline for agriculture in the country and its potential can be exploited through Second Indus Basin initiative with the help of the World Bank led consortium outside the budget and lending programme of the bank".

The visit of World Bank president Paul Wolfowitz's to Pakistan is significant. The World Bank chief, whose visit came early in his tenure, which began in June, said he would be able to learn more about the impact of reforms and the present state of the country's socio economic development. He will also assess how the Bank can further improve its support programme.

An important observation made by Mr. Wolfowitz is that the country is facing challenges in terms of sustained growth and ensuring equitable distribution of growth benefits to the poor. This would clearly indicate that the emphasis being laid by the bank is to sustain the momentum of growth. The Bank has enhanced its assistance for infrastructure projects in such key areas such as water and power, and this should help in this regard. The emphasis on economic growth being pro-poor is also quite evident. Human development indicators are low and greater effort is needed for the acceleration of social sector development. The reduction in the level of poverty should continue to receive high priority.

The World Bank has played a key role in the country's economic progress over the years. The fact that it has enhanced the level of its annual assistance shows the interest of this important institution in not only overall economic growth and development, but also in the welfare of the people.

After achieving macro economic stability, the country's economy has been on the path of high growth for the last three years. People expect the fruits of this economic progress to reach them in larger measure. The challenges of poverty reduction, creation of employment opportunities, and provision of better education and health should be faced with greater determination. The support from multinational institutions like the World Bank in meeting these challenges is timely and encouraging.