Countries and Regions

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p. 3 of 4 BACK | NEXT I. Development Situation II. Implementation of the Country Strategy and Program III. Portfolio Management Issues IV. Country Performance and Lending Level

Country Strategy and Program Update 2002-2004: Pakistan

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III. Portfolio Management Issues

A. Portfolio Performance Implementation

27. Pakistan’s portfolio performance, at 25 percent for contract awards and 28 percent for disbursements, is above the ADB-wide average for all developing member countries (DMCs). While the portfolio performance is hampered by issues ranging from implementation delays, cost over runs, and lack of local currency, Government recognizes that more needs to be done. During the Country Portfolio Review Mission in November 2000, the Government and ADB agreed to a set of specific time-bound action plans to improved portfolio performance. The Mission for 2001 is currently in progress and its recommendations will be known soon. Pakistan’s portfolio performance are given at Appendix 3.

28. While the physical implementation performance of the portfolio is above the ADB-wide average for all developing member countries, postevaluation findings have revealed that the developmental impact of many completed projects have been less than expected. The reasons are varied but include inadequate implementation of policy-based covenants, lack of in-country ownership and involvement in project design, and inability to meet commitments for sustained operations and maintenance of completed project facilities. To better achieve the developmental impacts, projects should be designed with a more thorough assessment of institutional capacity and beneficiary needs, and an appreciation of bureaucratic complexities and weak interagency coordination. Further, projects should avoid concurrent capacity building.

B. Counterpart Funding

29. The Government remains constrained from allocating adequate funds for operation and maintenance expenditures. Given the Government’s tight fiscal position, adequate counterpart funding is expected to remain an issue. Policy dialogue between the Government and ADB will continue to address the issues. In Pakistan, a higher percentage of local cost financing will be justified since ADB’s operations focus mainly on human development (education, health, population, and women in development), poverty reduction, and natural resource management concerns.

C. Monitoring and Evaluation

30. Project monitoring and evaluation needs to be strengthened, particularly for projects with many subprojects scattered across various provinces. Poor quality of services and civil works is a major concern and has adversely affected sustainability of development impacts. Slow moving projects are being reviewed monthly or quarterly to enable early identification of problems and measures for improvement. In this regard, the Government should improve its monitoring of development initiatives to ensure the projects are sustainable. ADB’s policy dialogue with the Government and the annual Country Portfolio Review of the Pakistan Resident Mission will continue to emphasize this issue.

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