Countries and Regions

	Table of Contents
p. 18 of 25 BACK | NEXT I. Country Performance Assessment II. Country Operational Strategy III. Sector Strategies A. Agriculture B. Infrastructure C. Social Infrastructure and Environment D. Governance Dimensions of ADB Operations E. Gender Dimensions of ADB Operations F. Province Level Interventions G. Private Sector Development 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 : III. Sector Strategies

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F. Province Level Interventions

84. In spite of its federal nature, government functions and the fiscal environment in Pakistan are over-centralized, particularly with regard to resource allocation, expenditure decision making and management, public sector institutions, and revenue mobilization. This has reduced the effectiveness of expenditures, weakened incentives for local revenue mobilization and cost recovery, and impaired accountability. Strengthening local government institutions, improving cross-sectoral networking of central government, private sector, NGO, and provincial and local governments in service provision, and expanding local resource bases and mobilization are therefore critical. Moreover, because of strong geographic, climatic, cultural and ethnic differences, the development requirements of provinces differ widely and require a more targeted strategic approach. Role sharing and increasing the number and diversity of service partners needs to be encouraged as means towards increased accountability, reduced risk and better adapted local services.

85. While past ADB operations in Pakistan have in many cases been implemented at the provincial level, this has generally been through "umbrella" projects covering all four provinces and with significant involvement of the concerned federal ministries. These interventions have not always been ideal due to their complex implementation arrangements and somewhat diluted policy and institutional focus. The Government and the ADB agree that in areas of provincial control a more systematic recourse to province-based operations covering one province at a time should be applied. This would considerably facilitate project management and implementation, strengthen the policy dialogue and capacity building efforts, and enhance ownership and accountability. A stronger provincial focus would also introduce replicability in other provinces. The use of policy based lending, including through SDPs, at the provincial level will also be considered on a selective basis. Given the present budgetary constraint, the SDP modality may be attractive for the provinces, since it would enable them to bring about much needed structural reforms, while pursuing critical development expenditures which have been a principal casualty of the fiscal crisis. Recently three provinces (NWFP, Balochistan and Sindh) have requested ADB's support for assessments of their financial outlook. Provincial level public sector expenditure and financial management reviews will be conducted in line with Government's efforts on decentralizing administrative authority and devolving power and responsibility to the local level. An ADTA for NWFP, Sindh and Balochistan Public Sector Reform has been programmed for 2001 to address the need for reforms in NWFP, Sindh and Balochistan and to assess absorptive capacity.

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