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Countries and Regions Country Partnership Strategies Document
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Country Strategy and Program Update 2005-2006: Pakistan
II. Implementation of the Country Strategy and ProgramA. Progress in Poverty Reduction13. Pakistan and ADB signed a poverty partnership agreement (PPA) on 16 September 2002. Progress indicators in PPA are generally in line with the performance targets under the poverty reduction strategy paper (PRSP), which was finalized and published in December 2003. The provincial PRSPs have also been prepared. The government’s commitment to poverty reduction is indicated by the increasing trend in pro-poor public-sector expenditure as targeted in the PRSP. Pro-poor expenditure increased from 3.8% of GDP in FY2002 to 4.3% in FY2003, and is likely to further increase to over 5% in FY2004. The main data for assessing performance on poverty reduction and human development indicators included in the PPA and the PRSP— as well as achievements under the Millennium Development Goals (MDGs)—is the Pakistan Integrated Household Survey (PIHS). However, the last PIHS survey available is for FY2002, while the next survey is planned for FY2005. Assessing recent progress in any of these areas is difficult. However, a recent government progress report shows progress on the MDGs, including education, health, and water supply access indicators, but the progress has to be accelerated to achieve the MDG targets. (Appendix 1, Table A1.1, and Table A1.3). B. Progress in the Country Strategy and Program Focus Areas14. Good Governance. As a result of the 17th constitutional amendment, a durable legal status has been provided for governance reforms introduced during the three years before the national elections in October 2002. Of particular relevance is the protection given to devolution by insertion of the Local Government Ordinance (LGO) in the constitution. This has reinforced the main focus of DSP, which includes: intergovernmental fiscal reforms; development of local governments’ administrative, political, and financial capacities; and the capacity of civil society to work with local governments for service provision, political participation, and accountability. 15. During April 2004, the government announced that outstanding disagreements with provincial governments on the Police Order of 2002 had been resolved. While this will catalyze the police and prosecution service reforms being promoted under the AJP, the possibility of increased political interference in policing operations at the district and provincial levels is a concern. Recognizing that the implementation of governance reforms depends on creating a broad-based constituency of support and consensus among government ministries and civil society, ADB will continue to promote the creation of coalitions in civil society and their dialogue with government, particularly in the context of devolution, gender, and access to justice. 16. Of particular note is progress with respect to the GRAPs. The Punjab and Balochistan provincial governments have approved their GRAPs, and approvals are expected from the federal government and the governments of Sindh and NWFP. These approvals will trigger effectivity of a $7 million TA loan entitled Gender and Governance Mainstreaming as part of the DSP. Notably, the significance attached by the government and ADB to GRAP implementation is demonstrated by the fact that this will feature as a policy achievement in four ADB policy loans in Punjab, Sindh, and Balochistan. 17. However, progress on governance and ADB-supported institutional reforms, particularly in agriculture and public utilities was slow and at times subject to reversal. ADB continued to engage the government in an extensive policy dialogue to expedite reforms in these sectors and to encourage all provinces to participate in reforms led by the federal government. 18. Rural Development. Because of high levels of rural poverty, the government continued to prioritize investments in rural development, with public-sector expenditure in this sector increasing 48.3% in FY2003. Initial implementation of ADB-assisted rural development projects including the DG Khan, Bahawalpur, Malakand, NWFP Barani (rain-fed), and Sindh rural projects was affected by start-up delays, significant progress has since then been made on most of the projects. At the same time, progress continued to be made on the ongoing ADBassisted microfinance and rural finance programs to provide increased access to farm and offfarm income and employment opportunities for the rural poor. 19. Inclusive Social Development. Delivery of social services, now mandated to local governments, shows promising signs of improvement. A study carried out jointly by ADB, World Bank and bilateral donors in 2003 examined the impact of devolution on service delivery. ADB has reaffirmed its commitment to align its social sector support as much as possible with devolved systems, in line with the study’s recommendations. The DSSPs proposed for Punjab, Balochistan, and NWFP will be designed to ensure effective and equitable distribution of resources to local governments, consistent with differential needs and performance. 20. Regional Cooperation. While security issues remain a concern, the improved political situation in Afghanistan offers new opportunities for cooperation with countries to the west. ADB assistance to facilitate subregional cooperation is focusing on two sectors: transportation and energy. In transportation, ADB has proposed projects that will connect Karachi Port and the upcoming deep sea port of Gwadar through improved road networks in Balochistan and NWFP to Afghanistan and Central Asia. In mid-2003, ADB organized a Ministerial Conference on Transport and Trade in Central and South Asia, and approved a regional technical assistance (RETA) grant to promote transport and trade between the two subregions. A major energysector initiative is the Turkmenistan-Afghanistan-Pakistan (TAP) Gas Pipeline Project, for which a feasibility study is nearing completion under two ADB RETAs. Against the background of improving India-Pakistan relations, ADB is processing another RETA in 2004 to promote South Asian regional economic cooperation by enhancing the capacity of the SAARC secretariat and member states for regional cooperation work in priority areas. C. Highlights in Coordination of External Funding and Partnership Arrangements21. ADB continued to strengthen its partnership and coordination with development partners (details of their assistance to Pakistan is in Appendix 1, Table A1.5), and actively pursued cofinancing possibilities with them. Several development partners provided cofinancing grants in 2003. The governments of the United Kingdom, Netherlands, and Canada provided $2.149 million in cofinancing for Support for Implementation of Decentralization II. The government of the Netherlands also provided $440,000 for the Supplementary TA for Access to Justice and cofinancing of $250,000 for the project preparatory technical assistance (PPTA) for Balochistan Resource Management Program. The United States Agency for International Development (USAID) provided $7 million in grant assistance to the Khushalibank, set up under the Microfinance Sector Development Program, for it to expand its microfinance operations to Balochistan. USAID also committed $4.5 million to construct a cross-border facility at Chaman under the Balochistan Road Development Sector Project. During 2004, the government of the Netherlands has expressed interest in cofinancing the TA loan under the proposed BRMP. The government of the United Kingdom has expressed interest in providing cofinancing support for the proposed Punjab DSSP. The government of Canada will provide $3.1 million, and the government of the United Kingdom’s Poverty Reduction Cooperation Fund (PRF) $800,000, for the TA on Support for GRAP Implementation. The government of the United Kingdom, also through PRF, will provide $900,000 for the TA on Implementation of Police Reforms in Punjab. In conjunction with its lending program, ADB will continue to actively pursue cofinancing from official sources to effectively address the important thematic priorities for ADB operations in Pakistan. The Organization of Petroleum Exporting Countries (OPEC) Fund for International Development has expressed interest in cofinancing either the Balochistan Rural Development Project or the Sindh Basic Urban Services Project for up to $15.0 million. ADB will maintain its dialogue with the government to identify appropriate cofinancing for the projects, which it supports during 2005-2006, including both official and commercial cofinancing opportunities. 22. Effective coordination with the main multilateral and bilateral donors was ensured through consultative meetings organized during the country programming mission, as well as through coordination meetings on specific operations. ADB also organized a brainstorming session on how to improve coordination among development partners. Periodic donor coordination meetings are now being organized, and attended by heads of mission. ADB has also initiated the formulation of a Donors’ Poverty Reduction Working Group. During 2003, ADB chaired meetings of the Donors’ Governance Forum and participated in monthly meetings of the Inter agency Gender and Development Group (INGAD). ADB also regularly participated in donor coordination groups for forestry, environment, and education, in addition to being involved with donor dialogue groups on agriculture and microfinance. Finally, ADB, along with other donors, participated in the quarterly donor coordination meetings organized by the government and chaired by the federal minister for finance and economic affairs.
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