Countries and Regions

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p. 5 of 25 BACK | NEXT I. Country Performance Assessment A. Economic Performance Assessment B. Poverty Assessment C. Assessment of Socio-Environmental Performance D. Governance: Sound Development Management E. Implementation Assessment II. Country Operational Strategy III. Sector Strategies IV. Regional Cooperation V. Donor Activities and Aid Coordination VI. Cofinancing and Catalyzing External Resources VII. ADB’s Operational Program VIII. Economic and Sector Work Program IX. Local Cost Financing

Country Assistance Plans - Pakistan : I. Country Performance Assessment

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D. Governance: Sound Development Management

26. Weak governance, both structural and systemic, is an important factor in Pakistan's poor economic performance, increasing poverty, and related problems. Lack of transparency, failure of accountability, and reduced efficiency and effectiveness, are pervasive in Government administration, politics and throughout the economy, and have resulted in mismanagement of resources and poor delivery of basic services. Governance problems include: (i) political uncertainties through confrontations between various organs of the state, which have distracted attention from economic management, undermined investors' confidence, and diverted the Government from development and implementation of necessary strategies and policies; (ii) politicization of economic decision making, and political interference in the use of public resources; (iii) failure of public institutions to fulfill their mandate, limited accountability, and ineffective policy implementation; (iv) an outdated legal and judicial system; (v) persistent law and order problems, and sectarian violence; and (vi) lack of fiscal discipline, tax evasion, loan defaults, non-payment of utility bills, and corruption.

27. The new Government is aware of the need for strong reforms and has adopted restoration of good governance as the cornerstone of its development strategy. While initial actions have focussed on accountability, especially with respect to loan and tax defaulters, the Government has proposed a wide reform agenda. The detailed implementation plan is to be developed by the National Reconstruction Bureau (NRB), a think-tank for the National Security Council, the highest policy making body. Elements include devolution and decentralization of state power to the local level; downsizing of a number of Government offices, and the introduction of greater transparency in economic decision-making processes. The Government plans to commence local body elections by the end of 2000 and has committed to financially empowering local bodies to maintain community services such as roads and water supply schemes. However further detailed announcements on the structure of local and district bodies are expected in the near future.

28. Previous measures, including the Accountability Act (1977), the appointment of a Chief Commissioner to investigate cases of corruption, a Good Governance Commission and a Commission on Administrative Restructuring have developed proposals to reform government procedures and the management practices, mandates, organization, and staffing of government ministries and departments. The Ministry of Law has embarked (with ADB TA assistance) on a comprehensive program to build the institutional capacity reform of the legal and judicial system to make it more effective and attuned to the needs of a modern economy, as well as to strengthen the rule of law. The ADB has indicated that it may support reforms with future program lending if there is genuine political support and strong commitment from the Federal and provincial governments.

29. Civil service reform has also been identified as one of the important components of the economic reform program. In early April, a high powered Committee for Civil Services Reform was constituted and the Government announced a reform to be undertaken over 3 phases. In phase one, the Ministry of Finance (MOF), as a pilot ministry, will start the reforms. By June 2000, a comprehensive reform proposal for the MOF will be finalized and actual restructuring changes will be introduced. Within MOF, the reforms have already been initiated in the Central Board of Revenue. In the second phase, the reforms will be extended to all ministries of the Federal Government. By June 2001, proposals for restructuring all Federal Ministries will be finalized and actual retrenchment will begin. In phase three, reforms of provincial Governments will be initiated by June 2001. The ADB proposes to assist the program with TAs and a program loan once prioritization and an agenda is agreed on by the concerned Government agencies.

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