IMF concerned over little progress made for reducing poverty in Pakistan
Business Recorder, Recorder Report
11/14/2002


ISLAMABAD (November 14 2002): IMF is concerned that too little progress has been made by Pakistan in recent years for reducing poverty, although quantitative evidence is not available.

While firm quantitative evidence is not (yet) available, government officials concurred with IMF that it was unlikely that much progress has been made in recent years in reducing poverty, although without the reforms poverty might have risen quite dramatically.

Low levels of growth and job creation, impact of drought on the rural areas where most of poor people live, as well as continued insufficient provision of basic social services, have been the main culprits in this regard.

IMF staff has urged the Pakistan officials to speed up the development and monitoring of poverty data and intermediation of social outcome indicators to allow a better and more timely measurement and analysis of poverty development and of the efficiency of various social programmes.

World Bank analysis, indicating that some of the main causes of poverty were lack of assets, malfunctioning judicial system, deep-seated gender issues, degradation of natural resources and growing vulnerability to tertiary diseases, highlights the need to more forcefully tackle these issues in the context of the full PRSP.

The lack of progress on poverty reduction mostly reflects continued low levels of private investment and growth, the impact of drought on the rural regions and inadequate provisions of basic social services as public spending on human development remains too low (0.5 percent of GDP on health and 1.8 percent on education in 2001-02--about half of the ratio in the average low income country.

Staff pointed to the WB analysis indicating that some of the main institutional causes of poverty (ownership of land and other assets, lack of a functioning judicial system, deep-rooted gender issues and etc) have yet to be fully addressed. In finalising the PRSP even greater emphasis needs to be given to such issues.

Another urgent task in the context of finalising the PRSP will be a realistic costing of achieving the authorities' social targets, to ascertain more firmly the level of human development expenditure required to rapidly improve Pakistan's poor social indicators.

Staff welcomes the strong increase in 2001/02 in education and health spending over the preceding year (by 17 percent and 34 percent, respectively) and the planned further increase in 2002/03, which would put I-PRSP spending ahead of defence spending. Staff sympathised with the authorities' view that, concomitant with stepping up such expenditure, better expenditure and outcome controls have to put in place, but expressed concern that implementation of systems to monitor (intermediation) outcomes has been too slow.

Staff urged the authorities to put in place quickly practical monitoring systems so to as to get as least preliminary indicators on which social programs work and which do not. In this way, the authorities would have an important input for formulating the next budget at the district and provincial levels. At least as important timely accounting of all expenditures at the local government levels needs to be fully assured, without which I-PRSP spending can not be meaningfully assessed.

Led by the World Bank's Social Development Unit, social impact analysis is currently underway to assess the (a) devolution and its impact on the quality of service delivery, especially to the poor and (b) the impact of tariff reforms in the gas and power sectors.

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