Contacts: In Islamabad: Shahzad Sharjeel (92-51) 2279641 ssharjeel@worldbank.org In Washington: Erik Nora (202) 458 4735 enora@worldbank.org WASHINGTON, June 1, 2006—The World Bank’s Board of Executive Directors today discussed a new Country Assistance Strategy (CAS) for Pakistan. This planning document covers the period 2006 - 2009 and envisages a flexible lending program of up to US$6.5 billion ─ a substantial increase over the previous CAS period. In the current fiscal year (FY06), lending is around US$1.5 billion. The joint Bank/IFC CAS, which details the Bank’s strategic approach to helping Pakistan achieve its development goals, places immediate priority on addressing the impact of the October 2005 earthquake. Up to US$1 billion will be used to support reconstruction and recovery; US$840 million has already been approved. In addition, based on the Government’s priorities for sustaining growth and poverty reduction, the increase in lending will be primarily in infrastructure ─ mainly energy, water, and transport ─ and human development. “This strategy is designed to help Pakistan prosper,” said John Wall, World Bank Country Director for Pakistan. “The country has moved from crisis to growth, laying the groundwork for sustained economic growth and significant poverty reduction. We will substantially ramp up support to Pakistan and focus on the areas that are most critical for the country’s poor and most vulnerable.”
Since 2000, Pakistan has managed a remarkable turnaround. During the 1990s, Pakistan’s economic growth slowed, and progress in improving social indicators stagnated. Beginning in 2000, the government initiated a more wide-ranging and ambitious reform program resulting in a dramatic turnaround. Economic growth accelerated from the average of 3.3 percent during 1997-2002 to 8.4 percent in 2004/05. Improved fiscal performance, generous external support, and improved revenue administration have enabled the government to exceed targets for social spending. “Pakistan’s recent growth performance is encouraging, but its continuation is by no means assured,” said Praful Patel, World Bank Vice President for the South Asia region. “Sustained growth will require continued sound macroeconomic management along with further improvements in the investment climate and faster progress in improving the quality of life for all Pakistani citizens, especially women.” Pakistan’s infrastructure needs significant investment in order to support the country’s growth and service delivery goals. Infrastructure services, including electricity, paved roads, municipal services, and telecommunication reach a relatively low proportion of the population. Moreover, inefficient operations in key sectors, like power and transport, adversely affect competitiveness. For the poor to participate and benefit from growth, Pakistan needs to accelerate human development. While progress is being made, analysis suggests that it will be difficult to achieve the Millennium Development Goals for infant mortality, child malnutrition, primary education completion, and elimination of the gender gap in primary school enrolment. The Bank’s strategy is aligned to Pakistan’s Poverty Reduction Strategy (PRSP) and is designed around three main pillars: - Sustained Growth and Improved Competitiveness: The principal focus of this pillar will be to support investments and reforms needed to sustain rapid, private sector-led growth. The Bank will provide support to key sectors such as agriculture and infrastructure, and help the government strengthen macroeconomic management through improving public expenditures and supporting ongoing tax reforms.
- Strengthened Governance and Service Delivery: Priorities in this area will be to support further reforms and investment to increase efficiency, transparency, and accountability in the use of public resources.
- Improved Lives and Protection of the Vulnerable: The Bank will focus on increased investment to education and health sectors, which are necessary to build the skilled, healthy work force necessary to sustain recent growth performance. This area of the CAS also features targeted interventions to help the poor, including strengthening safety nets and targeted interventions and community-based approaches in rural areas.
The IFC strategy in Pakistan ─ as expressed in the CAS ─ will increase investments with a target range of $500-600 million during the FY06-09 period. IFC activity will focus on three main sectors: financial, Small and Medium Enterprise (SME), and infrastructure. IFC has also initiated a substantial Technical Assistance program in Pakistan to build capacity and address constraints of the SME, infrastructure, and financial sectors. The World Bank Group’s assistance program will be aligned with the respective responsibilities of national and provincial governments and tailored to meet the needs of the individual provinces. Around half of the lending will be channeled to the provinces which bear most the responsibility for delivering public services such as irrigation, education, health, and water supply and sanitation. Preparation of the CAS benefited from consultations with Federal and Provincial governments, the private sector, donors, and civil society. Consultations were carried out using a two-stage process consisting of a client survey to solicit input on Pakistan’s development challenges and the role of the World Bank in Pakistan, and stakeholder consultations workshops. In conjunction with the CAS discussion, the World Bank’s Board also approved four new projects totaling US$340 million for Pakistan: NWFP First Development Policy Credit, Punjab Education Development Policy Credit, Punjab-Irrigation Sector Development Policy Loan, and the Punjab Municipal Services Improvement Loan. The NWFP First Development Policy Credit (US$90 million) supports the implementation of the provincial government’s medium-term reform program and is based on four pillars: reforms to accelerate human development and improve basic social service delivery; promoting growth and private sector development; fiscal reforms; and governance reforms in public financial management, procurement, civil service, and administrative devolution. The Punjab Education Development Policy Credit (US$100 million) supports efforts of the provincial government to implement wide-ranging reforms in the education sector. The credit is the last in a series of three development policy credits supporting the Government of Punjab’s three-year Education Sector Reform Program (PESRP), designed to enhance access, improve quality of education, and improve gender parity. Since the launch of the reform program, more than one million more children have been enrolled in Punjab schools. The Punjab-Irrigation Sector Development Policy Loan (US$100 million) will provide financing to a major provincial reform agenda to improve fiscal management and service delivery. The project is designed around four main pillars: institutional and policy reforms to improve the management and maintenance of Punjab’s irrigation system to ensure its integrity and sustainability; water resource management reforms to make intra-province water allocation and distribution more transparent; irrigation service delivery reforms to improve the quality, efficiency, and accountability; and reforms to encourage introduction of new technologies to improve water use efficiency and on-farm productivity. The Punjab Municipal Services Improvement Project (US$50 million) is designed to improve the viability and effectiveness of urban services provided by the participating Tehsil Municipal Authorities (TMAs), and to make these improvements sustainable and replicable in other municipalities. Since TMAs are not legally able to borrow money, project funds will be passed on to TMAs as grants. These grants will finance activities in two areas: strengthening the capacities of the TMAs for improved urban management, governance, and service provision; and financing infrastructure investments. The credits ─ NWFP First Development Policy Credit and Punjab Education Development Policy Credit ─ from the International Development Association (IDA), the World Bank’s concessionary lending arm, carries a 0.75 percent service fee, a 10-year grace period, and a maturity of 35 years. The loans ─ Punjab-Irrigation Sector Development Policy Loan and Punjab Municipal Services Improvement Project ─ from the International Bank for Reconstruction and Development (IBRD), are fixed spread loans, payable in 20 years, including 8 years grace period. -###- For more information on World Bank activities in Pakistan, please visit: http://www.worldbank.org/pk For more project information for the NWFP First Development Policy Credit, please visit: http://www.worldbank.org.pk/external/default/main?pagePK=64027221&piPK=64027220&theSitePK=293052&menuPK=293085&Projectid=P090689 For more project information for the Punjab Education Development Policy Credit, please visit: http://www.worldbank.org.pk/external/default/main?pagePK=64027221&piPK=64027220&theSitePK=293052&menuPK=293085&Projectid=P097636 For more project information for the Punjab-Irrigation Sector Development Policy Loan, please visit: http://www.worldbank.org.pk/external/default/main?pagePK=64027221&piPK=64027220&theSitePK=293052&menuPK=293085&Projectid=P096962 For more project information for the Punjab Municipal Services Improvement Project, please visit: http://www.worldbank.org.pk/external/default/main?pagePK=64027221&piPK=64027220&theSitePK=293052&menuPK=293085&Projectid=P083929 |
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