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ANNEX I: CONSULTATIONS WITH PAKISTAN CITIZENS
1.
A series of very extensive consultations were organized both on lessons learnt from past Bank
Group Assistance and on priorities for this CAS. The Bank Group country team (over 20 staff) in
collaboration with four NGOS (see attached program) and WBI spent a total of four weeks, one week in a
district in each province, and another week in the federal and provincial capitals, listening to over 5000
participants drawn from a broad range of background.
Consulting the People of Pakistan
2.
No vibrant society speaks with a single voice, and Pakistan—among other things—is a vibrant
society. During extensive consultations that the Bank conducted in 2000 and 2001 in preparation for the
CAS, Pakistanis at all levels predictably spoke with feeling about a wide range of concerns, hopes and
fears. Extensive though the Bank’s consultations were in time and area covered, they do not constitute a
scientific survey of public opinion in Pakistan. Their intent, instead, was to enable Bank Group staff to
hear directly from people, particularly those the Bank Group staff do not frequently meet in the ordinary
course of business—judges and police, students, journalists, tribal leaders, religious scholars, and women
and men locked up in jails. Nevertheless, in the hundreds of discussions that Bank Group staff held in
impoverished villages and bustling cities, four themes clearly dominated. They were:
•
•
•
•
A hunger for education, especially basic education for girls;
A thirst for water, particularly for clean, accessible drinking water;
A yearning for justice, for the maintenance of law and order to curb violence, corruption and
abuse of political influence; and
A criticism of the World Bank’s and IMF’s policies and practices, particularly for their perceived
collaboration with corrupt, anti-poor governments.
3.
Not every group raised all these points. Many rural Pakistanis also highlighted the importance of
access to quality healthcare and the infrastructural deficiencies in roads and public transport as well as
power and water supply. Some small town entrepreneurs stressed the importance of access to credit along
with transparency in taxation and regulation. Notably, however, while some ordinary citizens could not
see the direct link between the improvement in their lives and the government’s tax reform, devolution,
and privatization programs, they nonetheless saw a close link between the government’s social and
infrastructure sectors reforms and their improved access to education, health, water, sanitation and means
of transportation. At the grassroots, the prospect of devolution was greeted as often as not with
skepticism shading into a cynical expectation that devolution will continue to enshrine the existing
political power structure. In more than one instance, devolution was tagged as a Bank imposition rather
than the government’s own initiative.
Deficient Governance – Rural participants blame it on the government while Urban participants Blame
It on the Bank
4.
The findings of the consultations produce indisputable evidence of a failure of governance in
almost every area of daily life in Pakistan.
5.
Few of the Pakistanis who engaged in the consultative exercise used the word “governance” in
speaking of their lives and problems. The term is a specialized one that has not passed into ordinary
speech in Pakistan or elsewhere. The umbrella concept of top-to-bottom inefficiency and outright
corruption—in the delivery of social services, infrastructure and the preservation of the rule of law—
does, however, go far to explain most of the disparate failings of development cited by citizens.
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6.
Those include schools with neither furnishings nor qualified teachers, clinics without medicines
or skilled staff, villages without water or sanitation, unpaved and untended rural roads, inaccessible
veterinary services, unreliable public transport, backlogged courtrooms, bribe-taking tax and utility
inspectors, extortionist highway police and civil servants indifferent to all but political cronyism. The
Pakistanis who aired their grievances to Bank representatives were most articulate about situations they
knew first-hand. Collectively, though, they painted a portrait of a non-functioning system that impedes
development and poverty reduction and generates deep disillusionment.
7.
Pakistani women and men living in rural poverty, rarely blamed their plight on the World Bank.
They blamed their governments. They saw their problems as local ones, signs of wider, systemic failures,
but basically challenges that should normally have been or can be met by the district officers of one or
another government agency. Without significant exception, they listed education as an urgent need and a
sorely neglected one. Many said in plain and simple language: “if our leaders did not steal as much we
would not be leaving in these filthy conditions with animals and people using the same pond”; with
pregnant women dying on the way to hospitals” and with children dying of diarrhea because the doctor
in the village health clinic has not showed up for months”. For many of these rural poor, both elected and
government officials only know how to help themselves and forget the poor; many were critical of the
devolution, indicating they saw it all before, and did not expect much unless the elected district officials
are from their own village.
8.
In the workshops in the provincial capitalsLahore, Karachi, Peshawar, and Quettamany of
the urban elite and representatives of the middle class blamed the Bank and IMF policies for “hurting
Pakistan and creating poverty.” The Bank, urged one speaker, should “write off Pakistan’s debt and
withdraw.” “Facilitate but do not promote a western dominated policy agenda in the country”,
recommended another participant in Peshawar. Bank policies should change, said another, “from
dictatorial to friendly.” Echoing an appeal to “please leave us alone,” a third claimed to speak for
Pakistan’s citizens when he said “This nation is fed up with the IMF and World Bank agenda”. Some
thought 80 percent of Bank loans are in technical assistance payments to foreign firms and consultants.
Very few understood that Pakistan was a blend country eligible for both IBRD and IDA terms, most
quoted interest rates they thought the Bank charged that were far in excess of those actually charged and
almost none knew the IDA terms. Such criticism came in large measure from educated, articulate, urban
professionals. The perception among urban elites of the Bank as an accomplice in official sins of
omission and commission adds another challenge to the Bank’s work in Pakistan. Surprisingly these
criticisms and anger were not echoed in the federal capital, Islamabad where the Bank office is situated.
9.
Other participants from this same gathering of urban professionals, instead praised the Bank’s
assistance strategy to Pakistan and argued for increased assistance on concessional terms. Some said the
Bank should “give priority to education for women, technical education and family planning and health.”
Repeatedly, the participants in the district-level consultations urged the Bank to connect more closely to
community-based and non-governmental organizations. A Peshawar participant, for instance, counseled
the Bank to work with “formally organized” groups of the poor who “can best identify what will take
them out of poverty.” In Peshawar, Karachi, and D.G Khan district, some speakers cited “religious
groups” as deserving “direct” Bank support and encouragement. “The best building in any village and the
cleanest,” asserted a participant, “is the mosque, because the community manages it.” Others in Kohat
(NWFP) praised the Bank’s support using as example the Community Infrastructure and Services Project
(CIP)being implemented in some villages there with community participationwhere there was visible
impact of Bank’s support in improved rural roads and rural water supply and sanitation schemes.
10.
A number of those consulted pressed the case for more attention to women’s groups at all social
levels both as sources of advice and as “delivery mechanisms” for Bank-supported programs. The failure
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to “recognize women as partners in development in Pakistan,” in the view of a Karachi participant, “is a
major source of slow development.” Recommended solutions: hire more female teachers—less than two
percent of all teachers in some 200 villages are female—and make a special push to bring “literacy
programs to adolescent girls, the primary group affected by maternal mortality.” A parallel concern that
some political activists (but few others) raised was continued population growth in Pakistan. An
“illiterate population,” said a discussant in Lahore, “does not practice family planning because large
families provide them with safety.” Female illiteracy, she added, “is the most important reason for low
levels of contraceptive use, poor family health status, and empowerment.
11.
The consultations with politicians representing the major parties in Islamabad, Karachi, Lahore,
Peshawar, and Quetta, uniformly featured criticism of the Bank, some mild, some harsh. Somewhat more
charitably, many of the political
representatives of the major parties,
Box 1: The State of a School
tended to acknowledge Pakistan’s
shortcomings in various areas as
In the 200-year-old farming village of Allah Bux Khoso—
primarily the work of Pakistanis
Qasim Goth (Tehsil Lakhi), just 14 kilometers from the city of Shikarpur,
Sindh, the home of the Baloch Khosa Tribe, half the inhabitants are under
themselves. While some stuck to the
party line and praised their parties
the age of 16, 338 boys and 259 girls. Sixty-one of them—all boys—are
achievements while deriding other
enrolled in the single primary school, a one-room concrete building with a
parties’ policies, many still blamed
cracked ceiling slab, an out-of-order toilet block and—when Bank staff
the Bank for supporting past
visited—only one of the two appointed teachers on duty, taking all five
governments, imposing ill-conceived
classes.
A fifth grader could not perform simple subtraction or
policies and project design, or not
multiplication. A third grader who read aloud—perhaps from memory—
speaking strongly enough against the
could not answer easy questions about the lesson. Between 40 and 50
mismanagement
of
their
past
youngsters leave the village every day to attend Islamic schools in the
governments. Many asked the Bank
neighborhood.
to share in the blame when discussing
past government failures.
The boys’ primary school in Toolanj Jadeed, Kohat, NWFP,
seems on first sight a reassuring contrast—a solidly built, four-room, brick
12.
Religious
scholars
and
building commissioned in 1994, the only brick structure in the village,
representatives of religious parties
staffed by three teachers and attended by 142 students, 37 of them girls—
who attended the consultations
only two of them in the fifth class. As in Sindh, however, this NFWP
stressed that they were for education,
school has no water, no toilet, no electricity, and no classroom furniture.
Students squat on mats using their bags of textbooks as improvised desks
including of girls but only in
and memorizing many of their lessons. Perhaps because of motivated,
segregated schools.
While the
committed teachers, however, pupils showed considerable ability in
Jammat-I-Islami
representatives
reading. The commitment may extend to parents who send about 60 of
accepted that girls could attend mixed
their sons to private school in Gumbat – for monthly fees of Rs.100-Rs.
schools for the elementary cycle but
300 compared to the nominal Rs.14 that state schools charge—reflecting
needed to attend proper girls schools
their discontent even with the relatively impressive public facility in their
thereafter, representatives of the more
village.
But for the majority of the poor in this village, tradition and
conservative party—Jamiat Ulema-ecultural
pressures
stand in the way of girl’s education beyond the first three
Islam (JUI)—were more opposed to
grades.
In
Toolanj
Jadeed all of the women whom Bank staff spoke to had
mixed schools in general and warned
never set foot in a school yard either to study in their young age or visit
the Bank against pushing mixed
their children’s teacher.
schools. They were also adamantly
opposed to all forms of social
mobilization and warned that they will fight hard all the NGOs which were trying—in their views—
through their social mobilization to impose a western way of life and inciting rural women to adopt
attitudes contrary to Islamic traditions.
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Hungering for Education
13.
Mehrab Khan is an extraordinary 19-year-old from an ordinary Sindh village—Nim Sharif about
two hours outside Shikarpur. What makes him extraordinary is his determination to get a college degree,
a goal that involves commuting by bus three hours a day to a college in Rotadero and that requires his
father to devote half of the household’s meager income (Rs. 30 a day) to Mehrab’s expenses.
14.
Sixteen-year-old Rubina Khoso is even
more extraordinary. Where Mehrab is one of 8-l0
boys from Nim Sharif seeking a B.Sc. degree,
Rubina and her sister, Amina, are the only two girls
from their Shikarpur village, Qadir Bux Khosa, ever
to go to college. Her family’s income is some three
times that of Mehrab’s, and her bus commute is only
half as long, but as a woman she fears to make it
alone. As a result, one or two days a week —with
no companion to shield her from harassment—she
does not make the journey at all.
15.
Rubina, child of an enlightened and well-todo family, hopes to follow the example of her sister,
now taking a masters degree in economics. Mehrab,
whose father operates a wheat-milling machine and
has three other sons in school, does not know where
he will find work once he gets his degree. Too
young to teach in the village school, he sees himself
as too educated to become a mason or tailor—both
professions that are needed in the village—or a
welder or automechanic.
Box 2: The Fisherman of Sur Bandar
In the dawn hours before the primary school
opens in Sur Bandar, a coastal fishing village in
Baluchistan, the head teacher can be found on the beach
hauling in the net he cast into the shallows at low tide the
night before. For Master Ahsan Ali, the father of nine
children, the daily catch of fish is the difference between
survival and destitution for his family. His salary will not
buy enough food for his wife and children so he
moonlights as a fisherman. In another Gwadar district
village, Chib Kalmati Nagore, the lone primary school
teacher for 50 students works afternoons as a tailor and
even gives Koranic instruction to supplement his income.
In the Sur Bandar school where he has taught
for 15 years, Ahsan Ali has also had to improvise. When
some of his pupils won scholarships worth a total of Rs.
2000, he asked the beneficiaries if they would invest
some of the money in improving facilities at the school,
specifically, installing a tap for drinking water. They
agreed, and for Rs. 1500 the school now has piped water.
It also needs textbooks, but the head teacher judged water
the greater necessity. Without it, he asked, how can
children be expected to concentrate on their studies? In
the rest of the province, however, fewer than one
household in three had access to clean water in 1999.
16.
He will, at any rate, have an advanced
education. His sisters will have none. Nim Sharif
has no school set aside just for girls, and Mehrab’s
conservative parents would not consider sending
their daughters to any other kind of institution. In
their village and others like it, in any case, girls not only have no place for education but little time for it.
Once they are married, usually between the ages of 13 and 15, they are committed to work days—
cooking, cleaning, washing clothes, making dung cakes, collecting firewood, preparing animal fodder and
working either in the fields or at embroidery—that last 14-16 hours. As soon as they are old enough to
attend school, girls follow similar, grueling schedules. In some places, families need their school-age
daughters as babysitters for younger children while their mothers walk long distances carrying water for
the household. At least, Nim Sharif villagers have accessible water supplies.
17.
In the arid stretches of the NFWP, the women of Toolanj Jadeed—a settlement of 500
households—say they spend an average 25 hours a week fetching water from wells a kilometer or more
from the village center. In the summer, they must trek to a deeper well three kilometers away. In the
same season, their neighbors in Dohk Alwara must walk to the Indus River for water, taking ten hours a
week to provide a household necessity.
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18.
Still, even the 70 or so men of the Toolanj Jadeed Community Organization who talked with
Bank visitors in October 2000 recognized the need to educate their daughters. The village has no school
for girls, and parents are reluctant to send their daughters to an all-girls school more than two kilometers
away for many of the same reasons that keep Rubina Khoso from taking unescorted bus trips. Those
anxieties and the need for women’s hands in household work also result in girls dropping out of the
village’s five primary schools for boys after the third or fourth class. No girls attend the one secondary
school, and efforts to obtain at least one school just for
Box 3: A Model Madrassa in Punjab?
girls have failed. A building for them that was put up
some ten years ago on shamilati land (donated land) was
Madrassa Jamia Islamia in D.G Khan district,
never occupied because title was not properly
Punjab, is one of the few madaris which chose to
transferred. Parents, however, continue to seek
offer a full time education for its students which
educational opportunities for their daughters. They had
includes the public education curricula along with
the religious one. Students come from all over
written the provincial education department about the
Pakistan and as far away as the UK, and
village’s deprivation. Some had even written to the
Afghanistan. The school was built and is fully
secretary of education. None have received a response.
Another Option – Islamic Education
19.
The school in Allah Bux Khoso is one of 120
public schools open in the Shikarpur district. Ninetythree others are closed because no teachers can be
recruited to work at them. Responding to that shortage
and to religious convictions, many families send their
sons to Islamic schools, known as madaris. Pakistan had
3,000 such schools in 1978. It has more than 15,000
institutions for which the curriculum was designed by a
Mogul emperor three centuries ago. Their student body
is estimated to be close to a million. A number of
participants indicated that lack of access to public
education and inability to pay for private schooling lead
parents to send their children to Madaris. Many said that
while they want their children to know about Islam, they
did not want them to become Islamic scholars. They
only want them to be educated (see Box 3).
managed with private donations. It provides free
board and lodging to students and their teachers who
have separate accommodations (with their families).
Classrooms are used for teaching by day and as
dormitories at night. The school was immaculately
clean, with showers, a sports field, a large mosque,
bakery, kitchen, and cafetaria catering to students
and teachers. The teaching is in both Urdu and
Arabic. English is also taught for masters students.
Students have to graduate from the officially
recognized high school cycle before being admitted
into the Masters degree on religious studies. Those
applying to the Masters degree from elsewhere also
need to show a high school diploma. The principal
proudly indicated that a school for girls will be built
soon along with a hospital and a mall on adjacent
land acquired recently, all catering to student and
staff to form a united community.
Water – Too Scarce and Too Unhealthy
20.
Water availability and its quality have a direct bearing on educational and health outcomes,
particularly in rural Pakistan. Watching the younger children while adult women fetch water is a
common duty that keeps girls, especially, out of school. Water-borne diseases keep school attendance
erratic and is a main contributor to the high infant mortality rate. And, at another remove, inadequate
water supplies that limit agricultural production even in fertile soil also keep the children of farming
families from schools since they are too important to household income to be spared for the classroom.
21.
To one degree or another, the scarcity and low quality of water are serious development issues in
every district that Bank staff visited in the course of the consultations. The Dera Ghazi Khan district of
Punjab is an extreme example, not just because of a four-year-long drought. As an elder in the Roongan
Tribal Area put the situation: “we are still living in the Stone Age.” People and animals in the village of
thatched huts drink the same brackish water, but the drought has killed many cattle and forced half of
Roongan’s people to migrate. Among those who remain, women and girls spend 5-8 hours a day carrying
water. Modest outlays to line the channels of natural springs in the area and build small dams on nearby
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hill torrents would produce a reliable water supply, but the villagers have only their own unskilled labor
to invest in such projects. Children bring their own brackish water in bottles to school since the school
has no running water and no toilets. Of the five diseases that claimed the lives of 30 Roongan children in
2000, three are water-borne: diarrhea, typhoid and cholera.
22.
Far to the north in the NWFP village of Toolanj Jadeed, water is as high a priority as in Punjab
and Baluchistan, but its provision by the Public Health and Environment Department (PHED) has been
marked by so many false starts that the local inhabitants have lost faith in the government’s promises. In
the 1980s, PHED did pipe water from mountain springs to small tanks in the village. Without a system to
pump the water onward from the tanks, however, the enterprise failed within a month. According to a
PHED representative, an agreement with ten members of the community in 1995/96 had established the
conditions for digging a tubewell some distance from the village and piping water from it to Toolanj.
None of the 70-odd village men who met with Bank staff recalled any such agreement. They did recall
that a well had been dug but had failed to produce water.
23.
A second well was being tested at the time of the October 2000 Bank visit and, if it proved
productive, water was to be piped to Toolanj at a monthly charge of Rs. 50 per household. The village
men said they would be willing to pay that bill but would only believe the reality of piped water when and
if it started to flow. Meanwhile their women and girls (before they reach the age of purdah) tramp to
shallower dug wells once or more a day, wasting time and strength and risking accidents each time they
haul heavy buckets up and over the large logs that cross the mouths of the wells.
Infrastructure – Roads and Power
24.
Maintenance and general investment problems are not confined to water supply. They mark the
state of Pakistan’s roads and its delivery of electricity, not least for irrigation pumps, as well. In villages
and some cities, residents were quick to point out such deficiencies and their cost. The 1226 residents of
the Shikarpur District village of Allah Bux Khoso, mostly landless farmers, have to make their way along
two kilometers of unpaved road and across a narrow and rumbling concrete bridge to get to public
transport on a paved roadway. If the unpaved road, not repaired since it was built in 1996, were in decent
shape, said some of the villagers, the cost of getting their rice and wheat to market would be cut in half.
The dirt track connecting the NFWP village of Dohk Alwara to the main Kohat-Pindi road is seven
kilometers long, a ribbon of mud in the rainy season and an obstacle course at any time for the villagers
who need regular access to Kohat, 40 kilometers away, for health services and access to district
administration but must now depend on tractors or their legs to get them the first sixth of the way.
25.
Similar transportation problems—narrow, potholed highways like the one between Shikarpur and
Sukkur in Sindh province—are barriers transporters cite to the growth of private bus service between
cities and outlying villages and on the congested streets of Shikarpur itself. In Punjab, where the bridge
on the Multan-Karachi highway is so ill-maintained that traffic must creep across it. The impact of poor
infrastructure is direct and heavy on the poor and on the prospects for rural development. Pakistanis in the
Dera Ghazi Khan district, Punjab, for instance, tied the sorry state of the roads and, in consequence, of
public transport to high rates of teacher absenteeism, particularly among women teaching at the primary
school level, low rates of school enrollment generally and distressing rates of death in emergency cases
when transport is too slow or unavailable.
26.
Shortages of electricity are another impediment to poverty reduction. Again, in Allah Bux Khoso,
of two transformers supplied by WAPDA, only one functions. The other has burned out, but villagers
have been unable to get the agency to send a repair crew. In Dohk Alwara, lack of electricity forces
villagers to use hand pumps—at a construction cost of about Rs. 25,000 each—to move water from
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ponds to homes. In the summer, however, the ponds dry up and, as noted above, the village women must
hike four kilometers to the Indus for water.
Health Care – Gone Missing
27.
The direct connection between potable water and good health is no secret to rural Pakistanis.
They understand that many of their illnesses and deaths, in particular, those of their children are
consequences of drinking impure water, if not of the accompanying lack of sanitation and drainage in
their communities. What many understand less well is why is the government so indifferent to their
plight? Why are doctors who do not report to work in the village health centers (BHU) or refuse to treat
them even when they are there? Why do these people remain unpunished were repeatedly asked
questions. The tribal areas are the worst hit by lack of infrastructure and health care. A female doctor,
wife of a powerful landlord and former politician, assigned to the tribal area of Dera Ghazi Khan,
acknowledged that she rarely visit the health clinic she was assigned to, indicating that her salary does not
cover for the price of gasoline for her to use her car and travel to the tribal health clinic. Still she
admitted she continues to draw her salary despite not reporting to work. Her husband found it normal that
she should draw her salary while not reporting to work. He went on a tirade against World Bank’s
policies and foreign interferencehe found it preferable to discussing his and his wife’s accountability.
28.
In the Shikarpur District village of Nim Sharif, for instance, women listed a hospital—along with
a school and drainage—as their top priority. The village has no trained birth attendant or public medical
facility. The nearest hospital is an hour away, too far for one expectant mother in September 2000. She
and her unborn baby died en route. For the 1200 residents of another Shikarpur village—Allah Bux
Khoso—the nearest health facility is an hour away on foot. A self-styled ‘hakim’ (quack), however, lives
in Allah Bux Khoso.
29.
In the Baluchistan village of Chib Kalmati Nagore, in contrast, a dispenser, birth attendant and
two support staff run a basic health unit (BHU) that serves local inhabitants and those in neighboring
villages. A number of residents agreed that the Gwardar district had made progress in providing health
care and stimulating population planning. At the same time, they noted that the shortage of qualified
medical personnel extended from the absence of a pathologist to operate hospital equipment in Gwadar to
the distance—30 minutes by car—from Chib Kalmati Nagore to the nearest doctor. The villagers do not
have cars. The sick have to be carried either on the back of a donkey or on a litter, and the journey lasts
for hours.
30.
In Toolanj Jadeed, a doctor is supposed to be on duty at the BHU that serves two neighboring
villages. Residents said, however, that he does not come regularly even though, when he does visit from
Peshawar, he signs register entries indicating that he had been present for all the days he was absent.
Without him, the mini-clinic is staffed by two para-medical personnel. A Lady Health Worker assigned
to the village stayed only a few months. No midwife lives there, and no medicines are delivered. To get
them and their salaries, BHU staff have to go to Kohat, paying for the trip themselves.
31.
The most noticeable shortage in the health care field is that of medically trained women, a vital
element in delivering everything from immunizations to neonatal advice to other women. The reason that
there are too few midwives or Lady Health Workers or women doctors, however, does not lie in the
health field. It originates in the failure to educate girls, to give them the skills to take charge of their own
lives and help save the lives of others. Without that empowerment, many of the women with whom Bank
staff spoke mentioned health problems only in passing. The root of their greatest problems, they appeared
to indicate, lies elsewhere.
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The Crippled Arm of the Law
Box 4: Avenging Dishonor, Victimizing Women
32.
Whether in rural or urban Pakistan,
the weakness—even absence—of law
enforcement summons protest from those who
see themselves as denied elementary justice.
Among the victims are Sindh villagers in Nim
Sharif (Shikarpur District) who complain of
frequent cattle theft and of the ransom they
must often pay to recover their livestock.
Since the police do not respond to such
incidents, the herders have stopped reporting
them. Instead, their wives said, they have
bought rifles to protect their livestock and
themselves. And women are put in jail to
protect them from being killed by relatives
when there is no government safe house for
women in the area.
33.
Not all the aggrieved, however, are
poor peasants. Members of the Bus Owners
Association in Shikarpur feel doubly
victimized by police misconduct. On one
hand, untrained policemen levy heavy fines on
their vehicles without due cause.
34.
One young police superintendent,
respected in the city the Bank staff visited for
his honesty and his impact since he took over,
judges that 95 percent of police officials he
oversees are corrupt. Misdeeds range from
bribe-taking at high levels to the 47 officers
found to be heroin addicts. The police force,
he says, is so crippled that beyond efforts to
extortion, it can do little to prevent or punish
crime.
In rural districts around Shikarpur, Sindh, and across
the provincial border in Baluchistan, tribal traditions have long
allowed wronged husbands to avenge adultery by killing both the
wayward wife and her partner. Supposedly a crime of passion or
honor, the practice known as Karo-Kari still goes unpunished in
many places where customary law and societal attitudes favor the
aggrieved husband. Until recently, Sindh province—with 586
registered Karo-Kari cases in 1999, 100 of them in Shikarpur
district—was such a place. District authorities and NGOs,
however, are joining forces to raise awareness of and the penalty
for Karo-Kari killings, a significant challenge to local power
structures and value systems.
In recent practice, Karo-Kari plays out frequently as
extortion rather than murder. False charges brought against a
woman whose husband may actually be seeking a cost-free
pretext to divorce her can often be resolved by exacting ransom
(“taawaan”) payments from the alleged adulterer. In other cases
land acquisition is the real reason behind the accusation. If
someone wants somebody else’s land and the latter does not want
to sell, the former kills a woman from his side and accuses the
reluctant seller of having had an affair with the murdered woman.
The accused runs away fearing for his life, leaving his property
behind for grab.
In some cases a jirga (traditional tribunal) nominated
by the tribal chief (sardar) takes the case and tries to resolve the
dispute by imposing fines and keeping the accused women under
its protection until a judgement is passed.
The practice of Karo-Kari, however, persists. The law
now calls it murder. Between the law and its enforcement,
tradition erects strong barriers behind which women still live as
captives.
35.
A parallel situation—including low-level bribery—has brought the courts into disrepute. In the
Kohat District of NWFP, the head of the bar association believes the main obstacle is a shortage of judges
so severe that each judge has a docket with 70 cases pending at any one time. The judges of the district,
while agreeing that their ranks were too thin, cited poor police work as a major problem in criminal cases
along with the inability of the police or courts to provide protection to witnesses. They also cited
language barriers. The 1973 constitution required that court proceedings be conducted in Urdu or
Pashtun, the languages most widely understood, but to this date, court proceedings are still in English
which few if any poor understand. In Shikarpur, several judges and their aides were suspended in
2000 on charges of stealing evidence (heroin) to sale. The Bar Association president listed illiteracy and
the distance that litigants have to travel as an impediment to justice, a concern voiced in Kohat as well.
36.
The breakdown of law enforcement and the judicial system in many parts of Pakistan has severe
consequences for the entire society, not least for small private entrepreneurs left unprotected against the
Pakistan Country Assistance Strategy
Annex 1
Page 9 of 13
depredations of what is known as the “inspector raj.” Its members are the legion of petty officials with
the authority to license businesses, read utility meters, inspect premises for health and labor regulations
violations, impose highway tolls and assess taxes. Many small businessmen told Bank staff one story of
harassment after another. A WAPDA official, for instance, burned one businessman’s electricity meter
after being denied a bribe and then charged the trader with tampering with the apparatus. According to
members of the group, an “army of people” 15 strong typically descend on them to conduct the tax
assessment, usually sending an emissary ahead to intimidate and extort a bribe.
37.
The assessors include income tax, excise,
police, public health, labor, WAPDA and telephone
officials. In addition, in some areas, army members
have joined the gang of inspectors and bribe-takers.
One participant in the CAS consultation told of an
army wife who bought merchandise from him and
sought to exchange it after using it. His refusal
earned him arrest and the closing of his shop for
three days. But in D.G Khan, the army monitoring
unit there was praised for curbing corruption on
government poverty schemes since they were in
charge of overseeing their implementation.
Box 5: Justice Delayed = Justice Denied
Sometime late in the 1970s a Kohat District
land registry official, it is alleged, took a bribe and in
return gave a large landowner a false title to the
communal grazing land of the tiny (100 households)
settlement of Dhok Alwira. Before the land reform of the
1960s, the pastures had belonged to the landowner, but
they had been distributed to the villagers, who took their
claim for justice to the Session Court. That was over 20
years ago. In the intervening period of judicial action and
inaction, the community has pooled its funds at the
current rate of Rs.50 per household per month to fight the
case. It has spent Rs. 250,000—the annual income of an
average household over nearly a decade—and most of the
plaintiffs now think they will be lucky to see the suit
settled within one generation.
They are probably right. With 5500 cases
pending, the Kohat District court system has a 10-year
backlog. While the villagers wait, their livestock graze on
other land—land that could and should be put to more
productive use.
38.
Official
lawlessness
breeds
civilian
scofflaws. The small businessmen indicated they
would circumvent any attempt to document their
income for tax purposes. They recommended
returning the country to the self-assessment system
of taxation that they said worked two decades ago
and had the merit of making bribery unnecessary.
Without a stable relationship between government
and business, shaped by mutual respect for law, they
said they would not expand their investments even
into promising opportunities. One trader—the man whose meter was burned—said he was thinking of
joining relatives in the United States. Many others, he suggested, were ready to follow suit.
39.
With them and their energy and their capital would go one of Pakistan’s prime hopes for
development and for the sustained creation of jobs capable of reducing poverty.
40.
But there is potential for a more vibrant private sector in all the districts visited. Many
businessmen acknowledged that while more needs to be done to reduce harassment they saw a net
improvement in the investment climate over the past two years. This was more visible in Karachi and
Lahore but also in Gwadar district. The coastal strip on the Arabian sea holds a huge untapped potential
for both fisheries and tourism. According to various statistics, the area is capable of producing at least
70,000 more fish than it does currently on an annual basis. Bank staff visited two processing and
packaging plants (one foreign owned off-shore). There is potential for more we were told and the current
owners of the two processing plants had plans for capacity expansion. There are also plans for road and
port developments but reliable power supply was a serious constraint to this private sector development
potential.
Pakistan Country Assistance Strategy
Annex 1
Page 10 of 13
Pakistan CAS Consultations 2001 - Itinerary and Program
District Kohat, NWFP, consultation facilitated by the National Rural Support Program (NRSP) NGO
October 21st –
ISLAMABAD
•
Meeting with Mr. Mueen Afzal, Secretary General, Finance, and Economic Affairs
Department Staff, Ministry of Finance, Govt. of Pakistan.
October 23rd – 27th
KOHAT – NWFP
•
•
•
•
Meeting with Divisional & District Administration
Combined meeting with district officials (Education, Health, Agriculture, Irrigation,
Forestry, WAPDA, C&W and others).
Meeting with major NGOs working in the Kohat District.
Meeting with members of chamber of commerce.
October 24th
•
•
•
•
•
•
•
Walk through and meet with government officials in the Divisional Complex Kohat.
Walk through District Courts .
Meeting with lawyers.
Visit to the Center supported by the Poverty Alleviation Program.
Visit to Police Station and meeting with Police officials
Meeting with Revenue Department staff
Meeting with Judges.
October 25th
VILLAGE
TULANG
•
•
•
Meeting with communities (women and men), community organizations, women
groups, farmer groups,
Meetings with government officials of sub-district level line departments, including
tehsildars, putwaris, extension workers, dispensaries, local health workers.
Walk through village.
Visit schools, rural health centers.
October 26th
VILLAGE DHOKS
•
Meeting with district line departments officials.
October 27th
•
•
•
•
Meeting with Ulemas (Religious scholars).
Briefing on the Tribal System by the District Administrator.
Meeting with Tribal areas journalists.
Meeting with Tribal elders.
•
District Shikarpur, Sindh, consultation facilitated by the Strengthening Participatory Organization
(SPO) NGO
October 30th
October 31st
•
•
•
•
•
•
•
•
Briefing by Strengthening Participatory Organization (SPO) on Program.
Meeting with Divisional & District Administration
Meeting with District Officials.
Walk-about and meet people in District Courts.
Meeting with Lawyers in the Bar Room.
Visit to Judicial Lock-up.
Meeting with Police Officials.
Meeting with local NGOs.
Pakistan Country Assistance Strategy
November 1st
November 2nd
November 3rd
•
•
•
Annex 1
Page 11 of 13
•
•
•
•
•
Visit to Village Nim Sharif and Village Darhi Jhakhri (Tehsil Gorhi Yasin)
Meeting with communities, community organizations, women groups, farmer groups,
Meetings with government officials of sub-district level line departments, including
tehsildars, putwaris, extension workers, dispensaries, local health workers.
Walk through village.
Visit schools, rural health centers.
Meeting with religious scholars
Visit Tehsildar office in Tehsil Lakhi.
Spend the day in Village Qasim Goth (Tehsil Lakhi)
•
•
•
Meeting with Transport Association .
Meeting with traders, Bazaar Association.
Meeting with Growers’ Association .
District D.G. Khan, Punjab, consultation facilitated by the National Rural Support Program (NRSP)
February 12th
•
•
Meeting with Federal Government Officials (Finance Ministry, Planning Commission).
Briefing by National Rural Support Program (NRSP) on the team’s program in the
surrounding villages in D.G. Khan.
February 13th
•
•
•
•
•
Meeting with Divisional & District Administration.
Walk through District Courts.
Meeting with district officials / Line Departments.
Meeting with Teachers, Doctors and Paramedics.
Meeting with local NGOs.
February 14th
•
•
•
Briefing and Visit to IRUDP / PAP Schemes.
Travel to Roongen – Tribal area of D.G. Khan & meeting with the tribals.
Meeting with community.
February 15th
•
•
•
•
•
Meeting with Police Officials.
Visit to Local Prison.
Spend a day in the villages – One from a rain-fed area, One from canal irrigated area.
Meeting with Chamber of Commerce and Industry and Traders.
Meeting with the Army Monitoring Team.
February 16th
•
•
•
•
•
•
Meeting with locally elected representatives.
Meeting with Journalists.
Visit to Madrassa and meeting with religious leaders.
Meeting with Growers Association.
Meeting with Clerk’s Association.
Cultural Event hosted by the Divisional Administration .
Pakistan Country Assistance Strategy
Annex 1
Page 12 of 13
District Gwadar, Balochistan, consultation facilitated by the National Rural Support Program
(NRSP)
February 20th
•
Briefing by NRSP.
February 21st
•
•
•
•
•
•
Meeting with Divisional & District Administration.
Meeting with Judicial Magistrate and Lawyers.
Visit to Qazi Court.
Visit Judicial Lock-up.
Visit Police Station, Police Lock-up and meeting with Super-Intendant of Police (SP).
Meeting with Community Activists/NGOs.
February 22nd
•
•
•
•
Meeting with Villagers of Village Chib Kalmati.
Meeting with Female Group, BHU and School/Meetings with Villagers..
Visit to Akra Dam.
Meeting with Women, Fisherman and Moneylenders in Surbandar Village.
February 23rd
•
•
•
•
Meeting with Local Businessmen.
Meeting with elected Nazims, Naib Nazims and Councilors.
Meeting with Fisheries Department Officials from Pasni.
Visit male and female groups in Gazarwan Ward, meetings with Villagers.
February 24th
•
•
•
Visit School, Hospital, Power House and Salt Making Plant.
Visit Son of Sea Processing Plant.
Meeting with Fishermen, ABC Fishery Processing Plant.
February 25th
•
•
Visit Poverty Alleviation Program Projects .
Visit Women Handicrafts Center.
Pakistan CAS: Consultations with the Private Sector
May 15 – 23, 2001
Convened by IFC
March 12th
•
March 15th
•
Consultations with the Private Sector in Islamabad (Foreign Investors, Pakistani
Corporation, and Banks)
Consultations with the Private Sector in Karachi (Foreign Investors, Pakistani
Corporations, and Banks)
Federal and Provincial Levels Consultations
May 15 – 23, 2001
WBI and Regional Staff managed the discussion with the support of NGOs
May 15th
•
CAS Workshop in Islamabad facilitated by the National Rural Support Program
(NRSP) facilitated
May 16th
•
Meeting with representatives of main political parties.
May 17th
•
CAS Workshop in Karachi facilitated by NGO Resource Center – Agha Khan
Foundation (NGORC-AKF)
Meeting with representatives of main political parties
•
Pakistan Country Assistance Strategy
Annex 1
Page 13 of 13
May 19th
•
•
CAS Workshop in Quetta facilitated by the NGO Taraquee.
Meeting with representatives of main political parties.
May 21st
•
•
CAS Workshop in Peshawar facilitated by Sarhad Rural Support Corporation (SRSC).
Meeting with representatives of main political parties.
May 22nd
•
•
CAS Workshop in Lahore.
Meeting with representatives of main political parties.
Pakistan Country Assistance Strategy
Annex II
Page 1 of 23
ANNEX II: PAKISTAN PRIVATE S ECTOR STRATEGY
1.
The 1990s were a decade of lost opportunities for Pakistan. From independence to the late 1980s,
Pakistan outperformed the rest of South Asia. Then in the 1990s progress ground to a halt. Poverty
remained stuck at high levels, economic growth slowed, institutions functioned badly, and a serious
macroeconomic crisis erupted.
2.
What went wrong? To explain some of the trends of the last decade, this annex probes aspects of
the investment climate, viewed broadly to include the macroeconomic environment, political stability,
incentive regime, and infrastructure and regulatory framework.
3.
A key reason for the poor record of the 1990s was the government’s failure to maintain a
favorable investment climate for dynamic, competitive, and sustainable private sector growth. The effects
of the dual constraints of a misguided incentive regime and an inadequate regulatory framework for
infrastructure were exacerbated by an unstable and risky macroeconomic environment. But these failings
had been around for years. What was new was the way that an accelerating, corrosive deterioration in the
governance of public institutions weakened economic management and created an increasingly
unfavorable investment climate. Between 1990 and 2000, the country had eight different governments,
each averaging 16 months in office. Four democratically elected governments alternated with interim
regimes.
4.
This deteriorating governance aggravated the inadequacies and opacity of the incentive regime
and regulatory framework. It encouraged rent-seeking by the private sector and discouraged productivity
growth and international competitiveness. While other developing countries were increasingly integrating
into the global economy, their private sectors becoming more outward looking and less dependent on
government protection, Pakistan’s private sector became increasingly inward-looking and dependent on
government interventions. Its weakening performance set the stage for the macroeconomic crisis of the
second-half of the 1990s.
5.
The current government of Pakistan is determined to turn the situation around. Its recent Interim
Poverty Reduction Strategy Paper (I-PRSP) sets out a sweeping program of political, economic, and
institutional reforms that aim to establish the foundations of an open, modern, and prosperous nation
through revived broad-based growth. The World Bank Group’s private sector strategy for Pakistan is
based on support for this program, particularly efforts to improve the investment climate by restoring
private sector confidence in the economy. Three areas will receive special attention: the government’s
macroeconomic stabilization program; a growth-oriented structural reform agenda that encourages
productivity growth and more efficient resource allocation; and timely implementation of key structural
reforms of the incentive regime and the regulatory framework in infrastructure.
Pakistan’s Private Sector: Unfulfilled Potential
6.
A clear consensus in Pakistan has emerged that private sector led growth is essential in order to
provide better economic opportunities and to reduce poverty faster. The shift in emphasis has been
characterized by the public sector’s withdrawal from production activities through privatization, and by
the substantial advancement of the public sector’s role as facilitator and regulator (Table 1).
Pakistan Country Assistance Strategy
It is only in key areas of infrastructure
services – power, oil, natural gas,
transport,
telecommunications,
and
banking- that the public sector still
dominates. With several landmark
privatization transactions in banking,
power, oil and gas underway, this is
expected to change by the end of this year
(Table 2).
7.
Agriculture, the largest sector of
the economy, contributes 25 percent of
GDP and employs more than half the labor
force. As the primary supplier of raw
material (cotton) for the main industry
(textiles), it earns most of the country’s
foreign exchange (from cotton and its
derivatives). Growth has mainly come
from adoption of modern inputs,
combined with expansion of irrigated
water supplies. However, this strategy has
run its course, and future growth depends
on better management of existing levels of
resources and inputs, including expanded
access to land and credit. Agricultural trade
and pricing regimes have been substantially
liberalized, but policy reforms are needed
to improve the management of land and
water resources. Since the issues are
largely sector-specific, the agricultural
sector is not discussed further in this annex.
8.
Manufacturing, which employs
about 11 percent of labor force, has
stagnated, remaining at around 16 to 17
percent of GDP since the 1970s. The latest
Census of Manufacturing Industries (CMI,
1995-96)
counted
4,474
private
manufacturing entities and 42 public sector
entities, which together employ under 1
percent of the 4.06 million people in the
manufacturing and mining sector. Textiles
and clothing are the largest industries,
accounting for 79 percent of Pakistan’s
merchandise exports (in 1999), employing
over 40 percent of the sector’s labor force
and contributing nearly 29 percent to
manufacturing value added in 1995/96.
The food industry (including edible oils,
grain milling, sugar, beverages and
tobacco) is the second largest. Iron and
steel, chemicals, electrical equipment,
automotive, and pharmaceutical industries
Annex II
Page 2 of 23
Table 1: Units Privatized 1991 - 2001
Sector
Number
Amount
(Rs. million)
Automobile
7
1.1
Banking
6
6.6
Cement Production
11
8.2
Chemical/ Fertilizer
14
1.8
Energy
5
10.7
Engineering
7
0.2
Ghee Production
19
0.6
Roti Plants
15
0.1
Telecom
2
30.6
Textiles
2
0.1
Others
20
1.2
Total
108
61.2
Source: Privatization Commission Annual Report 2001.
Table 2: Privatization Program - Upcoming Transactions
Sector
Bidding Date
Banking & Finance
United Bank Limited (UBL)
March/ April 2002
Allied Bank Limited (ABL)
II Qtr. 2002
Bank Al Falah
II Qtr. 2002
Habib Bank Limited (HBL) – first tranche
II Qtr. 2002
Muslim Commercial Bank (MCB)
II Qtr. 2002
Habib Bank Limited (HBL) – second tranche
I Qtr. 2003
Industry & Real Estate
National Investment Trust (NIT)
March 2002
Pak Saudi Fertilizer Limited
March 2002
Faletti’s Hotel
II Qtr. 2002
Investment Corporation of Pakistan (ICP)
II Qtr. 2002
Oil & Gas
Working interest in 9 oil & gas fields
April 2002
Attock Refinery Limited (ARL)
II Qtr. 2002
Pakistan Oilfields Limited (POL)
II Qtr. 2002
Oil & Gas Development Corporation Limited (OGDCL)
III Qtr. 2002
Pakistan State Oil (PSO)
III Qtr. 2002
Pakistan Petroleum Limited (PPL)
I Qtr. 2003
Sui Northern Gas Pipelines Limited (SNGPL)
I Qtr. 2003
Sui Southern Gas Corporation Limited (SSGCL)
I Qtr. 2003
Power
National Power Construction Corporation (NPCC)
Karachi Electric Supply Corporation (KESC)
Faisalabad Electric Supply Corporation (FESCO)
Genco 1 (Jamshoro)
Telecom
Pakistan Telecom Corporation Limited (PTCL)
Source: Privatization Commission Annual Report 2001.
II Qtr. 2002
September 2002
IV Qtr. 2002
I Qtr. 2003
II Qtr. 2002
Pakistan Country Assistance Strategy
Annex II
Page 3 of 23
make up the rest of the sector. During the 1990s, most private investment went to capital-intensive
industries. The share of the “Big Four” capital- intensive industries—sugar, textiles (cotton yarn and gray
cloth), cement, and fertilizer—rose from 28 percent of total value-added in large-scale manufacturing to
more than 40 percent.
Dualistic Industrial Structure
9.
Large-scale activities dominates manufacturing output (70 percent of value-added) while small
and medium-size enterprises (SMEs) provide the bulk of employment. The most important areas of
activity for the SME sector are grain milling (16 percent), cotton weaving (13 percent), wood and
furniture (10 percent), metal products (7 percent), and other textiles (6 percent). The five la rgest
industries account for half of the SME sector, and cotton weaving and other textiles are their chief
exports. Although SMEs produce a quarter of manufacturing exports, most are low value-added products
that rely on traditional technologies.
10.
Over 90 percent of firms in
Pakistan are SMEs, most of which
operate in the informal sector.
According to the latest Small Household
Manufacturing
Industries
Survey
(SHMI, 1996), there are some 400,000
small-scale
manufacturing
units,
600,000 services units, and one million
retailers in the country. Together they
contribute about 11 percent to GDP and
employ roughly 80 percent of the
nonagricultural labor force. Most such
firms are engaged in nonagricultural,
low-productivity
service
activities
(household services, small-scale trade
and retail activities) that depend in large
measure on demand from other sectors
in the formal economy (Chart 1).
Chart 1: Sectoral Distribution of Non-Agricultural Labor in
Pakistan
Wholesale/
Retail/Hotels
26%
Others
4%
Social/
Personal
Service
29%
Construction
12%
Manuf'ing
19%
Transport/
Storage/
Comm
10%
Private Sector on Sidelines in Infrastructure
11.
Until the 1990s the government discouraged private sector involvement in most infrastructure
services, from power, oil, and natural gas to transport and telecommunications. And even during the
1990s, despite considerable private investment in thermal power generation and natural gas, weaknesses
in the regulatory framework kept the public sector the dominant supplier in all key areas of infrastructure
services (Table 2).
12.
Pakistan faces an enormous challenge in meeting its energy needs. Costs in largely state-owned
enterprises are high and infrastructure is grossly inadequate. The power sector is largely government
controlled. The state-owned Water and Power Development Authority (WAPDA) and Karachi Electric
Supply Corporation (KESC) together control almost the whole electric distribution and transmission
market. WAPDA also accounts for 65 percent of generation; 21 independent power producers account
for the rest.
13.
State control also characterizes oil and gas. Both of the largest natural gas producers, accounting
for more than 80 percent of total production, and the country’s two gas transmission and distribution
companies are state owned, as are extensive assets that include refineries, transport, and retail facilities.
The performance of public sector entities has been steadily declining, largely because of the rigidities of
public sector management and weak implementation of structural reforms. Demand for oil and gas has
Pakistan Country Assistance Strategy
Annex II
Page 4 of 23
increased significantly in recent years, mainly from the independent power producers (Box 1). A
mounting consensus holds that substituting natural gas for fuel oil would bring considerable
macroeconomic gains, improved performance by power plants, and lower power tariffs.
14.
Pakistan’s mining potential is
large. Although it could contribute as
much as 3 percent of GDP under
conservative
assumptions,
mining
presently contributes barely 0.4 percent.
The industry is dominated by federal
and
provincial
development
corporations,
with
little
foreign
investment.
Box 1: The Independent Power Producers’ Debacle of 1997
To meet the chronic shortfall in power generation by the public
sector, the government of Pakistan offered very attractive terms to
private companies to invest in power generation. Between 1995 and
1997, the private sector invested some $5 billion in power generation.
A change of government in early 1997 led to a review of
agreements with independent power producers, and a unilateral
cancellation or suspension of the accords with some of the producers.
Accusations of corruption and kickbacks were rampant. The dispute
dealt a severe blow to foreign private sector confidence in Pakistan. The
issue was finally resolved amicably in March 2001.
15.
Except in road transport
services, government agencies also
dominate the transport sector (railways,
airlines, port). Inefficiencies and high costs have seriously handicapped Pakistan’s economic growth and
export competitiveness. According to World Bank estimates, some 6 percent of GDP is lost because of
inadequacies in the transport system. Despite partial divesture (12 percent of shares) of Pakistan Telecom
(PTCL) in the early 1990s, the government retains a monopoly. PTCL’s exclusivity on all international
and domestic fixed line telephony services expires on December 31, 2002. Four mobile cellular
companies - including a subsidiary of PTCL - are now operating in the country. Preparatory steps for
PTCL privatization are under process and it is expected that the transaction will be brought to the point of
sale by June 2002.
Disappointing Economic Gr owth
16.
Slowing economic growth, poor export performance, and falling investments were the features of
the deteriorating performance of Pakistan’s economy during the 1990s, a lost decade in the fight against
poverty. Not only did the incidence of poverty remain unchanged between 1990/91 and 1998/99; but
more people were actually living in poverty in 1998/99 than 10 years earlier.
17.
GDP
growth
decelerated
considerably
during the decade, falling to
2.6 percent in 2000/01 after
averaging 5 percent over the
previous
four
decades
(Table 3). According to
recent analysis (Arby, SBP,
2001), the slowdown relates
to the decline in the trend
GDP growth rate, starting as
early as the mid-1980s,
combined
with
the
recessionary phase of a
business cycle that began in
the early 1990s. Most of
the deceleration came from
the
halving
of
manufacturing’s growth rate
to 3.7 percent during the
1990s from 8.2 percent in
Table 3: Growth Performance in the Pakistan Economy
1990 1995
1995 2000
1999/
2000
2000/2001
6.6
4.9
4.2
4.8
4.7
8.4
5.1
4.0
4.8
3.2
2.4
6.5
4.0
3.9
6.1
1.4
-0.2
5.3
4.8
2.6
-2.5
7.1
7.8
5.3
4.4
18.6
16.8
9.1
7.8
19.5
18.0
8.6
9.4
17.0
15.2
6.4
8.8
15.6
14.0
5.8
8.2
14.7
13.1
5.6
7.5
10.1b
7.6 b, c
1980s
GDP growth rate
(% FC, constant rupees)
Agriculture
Manufacturin g
Large
Small and medium scale
Services
Total investment
(% of GDP)
Fixed
Public
Private
6.1
4.1
8.2
8.2
Total exports
(%, constant US$)
8.7
8.0
-3.8 a
a: 1995 to 1999; b: in nominal terms; c: July -April
Source: Pakistan Economic Survey 2000-2001, World Bank.
Pakistan Country Assistance Strategy
Annex II
Page 5 of 23
the 1980s, and to a lesser extent from the weak performance of the service industry (Table 3). In contrast,
agriculture performed better during the 1990s, helping to sustain overall growth because of its large
contribution to GDP and employment.
18.
Within manufacturing, the decline in growth was uneven. It was more pronounced in large-scale
manufacturing, with a larger share in manufacturing value added, than in small and medium-size
enterprises (see Table 3), though there is some uncertainty in those figures since the quality of economic
information on small firms is poor. Among large firms, the decline was also more pronounced for exportoriented industries than for domestic oriented industries, which have a much
Chart 2: Growth in Industries
(index of physical output)
larger share of manufacturing value
added (Chart 2).
Domestic oriented
Dramatic Fall in Exports Reflects
Failure to Share in Global Production
20%
15%
10%
5%
0%
-5%
Export oriented
Chart 3: Pakistan Export Performance
A
B
99/00
98/99
97/98
96/97
95/96
94/95
93/94
92/93
91/92
90/91
89/90
88/89
87/88
86/87
85/86
19.
After growing rapidly during
the 1970s and 1980s (7.1 percent or
more a year), export earnings (in real
US dollars) fell 1.9 percent a year
between 1992 and 1999, lagging behind
low- and middle -income countries and the South Asia region (Chart 3A). This poor export performance
refle cts Pakistan’s rising reliance on a few products (textiles and clothing accounted for 79 percent of
merchandise exports in 1999, up from an already high 64 percent in 1980) whose export unit values
stagnated (Chart 3B) and whose export prospects are dim relative to the exports from other, more
successful Asian countries (Table 4).
Pakistan Country Assistance Strategy
Annex II
Page 6 of 23
Table 4: Export Prospects, Pakistan and Competitors
Country
Export growth
prospects
indexa
Major 1999 export products as share of total exports (percent)
Pakistan
1.6
Synthetic weaves (14 percent), Linens (11 percent), Cotton fibers (8 percent), Leather cloth
(5 percent), Cotton garments (5 percent)
China
3.9
Toys (8 percent), Footwear (6 percent), Machinery Parts (3 percent), Handbags (3 percent),
Outwear knit (2 percent)
India
2.6
Diamonds (17 percent) Cotton yarn (4 percent), Shell fish (3 percent) Precious jewelry (2.5
percent), cotton garments (2 percent)
Sri Lanka
3.0
Outer garments (9 percent), Outwear knit (6 percent), Tea (5 percent), Blouses (5 percent),
Cotton garments (4.5 percent)
a. The index reflects the influence of global demand growth, assuming no change in the country’s competitive position. The higher the
index, the higher the export market prospects. Countries with an index greater than unity have above average export market prospects.
Source: World Bank.
20.
Pakistan’s deteriorating export
performance seems to reflect an inability
to integrate into the global economy and
participate in global production sharing
(specializing in different stages of the
production chain), as many of its
competitors across Asia are doing. While
competing Asian economies were
increasingly integrating with the global
economy, Pakistan’s trade openness
declined both in absolute terms and
relative to other Asian economies (Chart
4).
Chart 4: Trade Openness - Pakistan Loses Ground
Trade as a % of GDP
50
40
30
20
10
0
1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000
Pakistan
China
India
Indonesia
Sri Lanka
21.
This retreat - particularly dramatic in the textile and clothing industry—contrasts sharply with
trends in Bangladesh, China, India, and Sri Lanka, where textile and clothing exports performed
significantly better than in Pakistan. These competitors capitalized on their comparative advantage in
labor-intensive clothing production by establishing zero-tariff schemes for imports of needed raw
materials such as cotton and blended yarns and fabrics. China’s intra-industry trade index in textiles, for
example, increased from 34 percent to 54 percent during the last decade, enabling China to develop its
clothing industry and become the world’s largest clothing exporter (Table 5).
Table 5: Global Production Sharing in Pakistan and Other Asian Economies
(Intra-Industry Trade Index, 1990 and 1999)
Pakistan
All goods
1990
9.6
1999
8.6
China
1990
29.0
1999
30.3
Indonesia
1990
14.2
1999
31.0
India
1990
34.4
1999
40.2
Sri Lanka
1990
16.6
1999
20.2
Bangladesh
1990
7.4
1999
6.7
All manufactures
7.5
6.6
30.3
28.9
17.3
39.7
36.5
45.2
16.5
20.6
7.4
7.3
T extiles
11.6
6.7
34.0
53.8
54.7
46.5
21.6
17.9
7.6
23.2
17.9
15.6
Clothing
1.2
1.2
63.2
10.2
63.4
2.9
44.3
2.2
67.1
6.0
2.2
10.2
Chemicals
4.2
4.7
41.4
65.1
28.9
65.1
39.4
57.5
14.1
15.7
20.0
21.2
Machinery and transport
2.6
5.8
49.6
53.7
7.6
53.7
24.3
40.1
9.6
19.8
1.8
5.2
Other manufactures
14.2
15.9
24.7
26.4
19.5
26.4
54.7
61.8
40.8
41.8
7.8
6.4
Note: The intra-industry trade index ranges between 0 and 100. The higher ratios indicate that gains from specialization in different products
are being exploited and that the participating country is increasing its integration into the global economy.
Source: World Bank.
Pakistan Country Assistance Strategy
Annex II
Page 7 of 23
22.
Had Pakistan encouraged global production sharing in the textile industry by easing imports of
raw materials, its textile and clothing exports would probably both have performed significantly better.
Global integration would have enabled these industries to import the raw materials they needed to
diversify their export products, move to export products with higher value-added and more dynamic
(volume or price) market prospects, and take better advantage of the global relocation of the textile and
clothing industry that occurred during the 1990s. It would also have enabled those industries to soften the
impact of the poor domestic cotton crops of the 1990s, inoculating their export potential against the
vagaries of domestic cotton production.
Falling Investments
23.
Investment fell as a share of GDP throughout the 1990s, reaching an all-time low in 2000/01.
The rapid decline in investment by government and public enterprises accounted for most of the drop
(Chart 5 A). Investment by the private sector was flat till the mid-1990s, followed by a slight, short-lived
spike and then a sharp drop after the 1998 sanctions and ensuing macroeconomic crisis. Averaging less
than 1 percent of GDP, foreign direct investment (FDI) remained small in Pakistan throughout the 1990s,
with the exception of 1995–97. Between 1996 and 2001 (years for which disaggregated data are
available) most FDI was directed to domestic -oriented and highly capital- intensive industries, notably
power generation, oil and gas, and chemicals (fertilizer, synthetic fibers), but surprisingly little to exportoriented industries such as textiles (Chart 6). Investment in manufacturing has fallen steadily since
1993/94, especially for large manufacturers (Chart 5 B).
Chart 5: Capital Formation (constant 1980-81 prices)
A
B
Gross Capital Formation
(% of GDP)
24.
4%
3%
Government
Public
Private
2%
1%
Another change in private investment
patterns in the 1990s was the increased reliance on
external finance. Until about 1996, domestic
banks were reducing their exposure to the private
sector, encouraging the private sector to borrow
abroad (Chart 8 shows that the flow of private
external debt increased at the time when private
sector claims as a percentage of bank assets were
falling). Rising domestic interest rates relative to
foreign interest rates also expanded arbitrage
opportunities, further encouraging borrowing
abroad. The State Bank of Pakistan facilitated
Chart 6: Distribution of FDI (1996--2001)
Other
Agribusiness
Textiles
Chemicals
Oil & Gas, Mining
Cement
Financial services
Transport, Storage &
Comm
Power
Construction
200001
199899
199697
199495
SME
199293
0%
199091
200001
199899
199697
199495
LSM
199293
199091
20%
18%
16%
14%
12%
10%
8%
6%
Gross Capital Formation in Manufacturing
(as % of GDP)
Pakistan Country Assistance Strategy
Policies behind the Incentive Regime of the
1990s and Deteriorating Governance
Chart 7A: Which Private Sectors Gained or Lost in
Access to Domestic Bank Lending? (1985-2000)
% growth above average growth rate
external commercial borrowing by private
investors through a Foreign Exchange Risk
Insurance Scheme, at least until 1995,
making such arbitrage opportunities
extremely attractive.
Annex II
Page 8 of 23
Agriculture
40%
Mining
Manufacturing
30%
Construction
Utilities
20%
Commerce
10%
0%
25.
An unfriendly business climate
85-90
90-95
95-2000
helps to explain the declining economic
-10%
performance and stagnating poverty of the
-20%
1990s. Yet the incentive regime (the trade
and investment regimes, industrial policies,
tax administration and regulations) of the 1990s did not look very different from that of the 1980s. If
anything, it should have been better. The government had initiated a series of structural reforms in the
1990s, notably reform of the financial sector, government withdrawal from manufacturing, and external
trade reforms.
% growth above average growth rate
25%
Clothing
Chemicals
20%
Cement
Machinery
15%
Automotive
10%
5%
0%
85-90
-5%
90-95
95-2000
-10%
Chart 8: Sources of Private Sector Financing
1,200
Private Ext Debt (excl FCD)
1,000
800
60%
600
400
55%
200
0
-200
50%
-400
-600
2001
2000
1999
1998
1997
1996
1995
1994
1993
-800
1992
45%
Private External Debt (US$ million)
% Private sector claims
65%
1991
27.
Until 1997, an inward-looking trade
regime made extensive use of directed
incentives, principally end-user based tariff
exemptions or concessions (known as
Statutory Rules Orders—SROs). The regime
provided high nominal protection and,
through cascading tariffs and exemptions,
even higher effective protection to import-
Agribusiness
Textile
1990
Changes in the Trade Regime Are Not Yet
Biting
Chart 7B: Which Private Manufacturing Industry
Gained or Lost in Access to Domestic Bank
Lending? (1985-2000)
% private Sector Claims in Bank
Assets
26.
The unprecedented degree of
political instability, however, undermined
these advances with a rapid deterioration in
the governance of public institutions and
domestic policies. The series of short-lived
governments, each with its own priorities
and vested interests, exacerbated policy
instability and the opacity of an incentive
regime that discriminated against exports
and labor-intensive industries, discouraged
productivity growth, and bred large
inefficiencies. The incentive regime relied
heavily on short-lived, mostly end-user
based instruments that combined high tariff
protection
with
special
concessions
(exclusive
licenses,
franchises,
tax
concessions, preferential access to subsidized
credit).
The resultant uncertainties and
governance failings undermined the business
confidence of domestic and foreign investors
and became a major deterrent to private
sector confidence and investment.
Pakistan Country Assistance Strategy
Annex II
Page 9 of 23
substituting and capital- intensive industries (fertilizer, cement, synthetic fibers, motor vehicles) while
discriminating heavily against exports by raising the cost of inputs and raw materials. Exports were hurt
further by dysfunctional duty drawback schemes managed by the Central Board of Revenue. The bias
against export-oriented industries helps explain Pakistan’s poor export performance during the 1990s.
28.
Policy shifts in 1997 began a move toward world prices. In April-May 1997, the maximum tariff
was lowered from 65 percent to 45 percent and the number of slabs from 11 to 5. By January 2003, the
number of tariff exemptions and concessions (SROs) is to be reduced; the maximum tariff is to be cut to
25 percent; and slabs are to drop to three.
Frequency (%)
29.
Although these changes look significant (chart 9), they do not tell the full story. While the
number of SROs has been cut, they still account for a 30 percent of the difference between potential duty
collections (had all imports paid the full statutory duty) and actual collections. Most of the remaining
exemptions are in the manufacturing
sector, particularly in automobile
Chart 9: Changes in distribution of Statutory Rates:
assembly (imports of parts and
1995/96 to 2000/01
completed vehicles). And despite the
40
overall move toward lower and fewer
2000/01
35
tariffs, significant, though few
1995/96
30
domestic industries continued to
25
benefit from high tariff protection.
20
These exceptions are consistent with
15
observed
growth
rates
for
10
manufacturing for 2000/01, which
5
0
show high growth for import0
10
substituting industries such as auto
20
30
40
50
assembly (23 percent) and fertilizer
60
65+
Tariff Slabs (%)
(8.5 percent), but slow growth in the
export-oriented textiles industry (2.7
percent).
30.
All this means that by 2002 the private sector is likely to be increasingly exposed to international
competition, but the anti-export bias and nontransparent trade regime remains. The tariff reductions and
rapid devaluation of the currency since 2000 are probably behind the improvements in export
performance in recent years. But the trade regime and prospective reforms need to be assessed carefully
for their effectiveness in correcting the anti-export bias and in improving the terms of trade to encourage
faster growth and a greater export orientation. International experience suggests that low, uniform tariffs
would do much to spur a more efficient allocation of resources in the economy, eliminating the antiexport bias and encouraging competitiveness and productivity growth.
Industrial Policies Have Disco uraged Productivity Growth and Contributed to Declining Openness
31.
Since the early 1990s, the government has gradually withdrawn from direct involvement in
manufacturing. It continues, however, to attempt to pick winners through its industrial policies despite
increasing evidence that these policies discourage productivity growth and restructuring in significant
manufacturing industries.
32.
Industrial policies are also likely to have played a key role in the decreasing openness of the
economy during the 1990s (see Chart 2) and the bias in resource allocation away from export-oriented
and labor-intensive small and medium-size enterprises and toward domestic market-oriented and capitalintensive industries (see Charts 6 and 7). Constraints on private investment tightened during the 1990s,
initially in domestic financing and later in external financing (see Chart 8) as reserves and
macroeconomic imbalances mounted. In this increasingly restrictive setting, the government’s industrial
policy assumed greater importance by lowering perceived risks for private investors (by raising returns
both over and under the table). As Box 2 illustrates, this intensified the bias of private investment toward
Pakistan Country Assistance Strategy
Annex II
Page 10 of 23
inward-looking and capital-intensive industries where government can more easily “protect” returns on
capital than it can for export-oriented industries.
Box 2: How Sectoral Policies Encouraged Inward-Looking Strategies & Discouraged Productivity Growth
Fertilizer. The 1989 Fertilizer policy provided a subsidy on feedstock gas that guaranteed above-norm rates of return
to the domestic fertilizer industry. The subsidy, while prompting $1.2 billion worth of investments in urea production in the
1990s, also encouraged such gross inefficiency in production that on average, factories operate at least 25 percent below
international benchmarks. Along with similar waste in distribution due to the absence of product sharing, the subsidy also
inhibited productivity growth in agriculture—some 50 percent of urea applied by farmers was wasted—and by diverting scarce
fiscal resources from proven growth-enhancing public expenditures in education, irrigation and drainage, technology
development and dissemination, rural infrastructure.
The new fertilizer policy announced in August 2001, although an improvement over the 1989 policy, still sends the
wrong signals to investors by discouraging productivity gains. And by perpetuating nontransparent subsidies and direct
government intervention, it discourages potential investors. The new policy also has macroeconomic implications (addressed in a
later section). The policy reaffirms the dual (feedstock-fuel) gas pricing regime, brings domestic feedstock gas prices in line with
Middle East price levels, phases out the feedstock subsidy by 2006 for old fertilizer plants and by 2008 (contract expirations) for
“new” plants, introduces a new feedstock subsidy (10 percent of the Middle East parity price) for future plants with a 10-year
lock-in price feature, dedicates an existing gas field for use by fertilizer plants, and reaffirms the deregulation of fertilizer prices.
Textiles and clothing. Growth in textile and clothing exports rose about 13 percent a year (in US dollar terms)
between 1990 and 1995, then fell to –2 percent in 1995 before rising slightly to 3 percent in 1999. The industry’s deteriorating
performance relative to that of key competitors was in large part a result of policies that led to limited product diversification.
Among them are complete dependence on cotton and heavy reliance on low value-added products with limited market prospects
(see Table 4) and on capital-intensive (spinning and weaving) rather than labor-intensive products (clothing).
The high effective protection of the cotton-textile and synthetic fiber industries hurt the export competitiveness of the
clothing industry, compelling it to rely on a narrow and low-quality range of yarn and cloth and heavily protected synthetic fibers
produced locally. The textile industry benefited from cheap cotton through the cotton exp ort tax and export restrictions—
eventually relaxed during the 1990s—and from preferential access to subsidized credit and other special incentives. High import
tariffs (25–35 percent) or bans on imports of semi-manufactured textile inputs coupled with dysfunctional import duty and sales
tax rebate schemes have discouraged diversification and been a major obstacle to improved export performance by the clothing
industry. These policies have prevented the clothing and textile industry from taking advantage of global production sharing (see
Table 5).
Sugar. The lifting of exclusive rights for sugar mills to draw cane from specified areas (de-zoning) in 1987, coupled
with highly subsidized credit and other incentives, prompted large investments in the industry. More than 40 percent of the 67
mills operating in 1999/2000 entered the industry after 1987. Yet the industry suffers from poor technical, financial, and
economic performance, with productivity growth either at the field or mill level lagging behind other major sugar producing
countries (Chart 10). De-zoning that has encouraged new and larger sugar mills to compete with existing mills and divert cane
from them has carried a cost in falling capacity utilization, large capital investments, high unit costs of production, and low and
declining (relative to the world) cane and sugar yields (Chart 10). The absence of zoning discourages mills from investing in outgrower fields with higher cane and sucrose yields since they are no longer assured of sharing ni the benefits of higher
productivity levels in the field or factory. De-zoning is the main reason for the poor productivity performance of the sugar
industry and the lack of consolidation and restructuring.
Steel. The steel industry also suffers from the effects of misguided policy. Tariff protection for state-owned Pakistan
Steel (PASMIC) has impeded the development of downstream engineering industries. PASMIC meets about a third of the
country’s steel demand but at prices some 25 percent higher than international prices. High tariffs penalize exporters of
engineering products, whose products are uncompetitive in the international market.
Financial Policies and Institutions Are Still Weak
33.
Until 1997, the banking system was dominated by public institutions and suffered from
inadequate prudential regulation and supervision and a weak legal and judicial environment. By the mid1990s, public sector banks were in severe distress, a consequence of poor governance in the banking
system and deteriorating governance in the incentive regime of the real sector. Development finance
institutions accumulated non-performing loans ranging from 30 to 70 percent of their portfolios and
accounting for about 80 percent of the bad loans of the banking system. The poor quality of banking
Pakistan Country Assistance Strategy
Annex II
Page 11 of 23
assets was especially acute in the fertilizer and sugar sectors; non-performing loans totaled 89 percent of
advances to the fertilizer industry and 60 percent to the sugar industry.
34.
The government introduced reforms in 1997 to strengthen governance and financial discipline in
the banking sector. The reforms upgraded prudential regulation and strengthened the authority of the
central bank to supervise banks and enforce regulations, improved legal and judicial processes for
enforcing financial contracts and facilitating foreclosures, and initiated corporate governance reforms in
the nationalized commercial banks.
Chart 10: Productivity Indicators in the Sugar Industry
(a)
(b)
(c)
(d)
Source: LMC.
35.
While details of the reforms are described in the Country Assistance Strategy (CAS), two points
should be noted here. The first is that, despite progress in stemming the flow of non-performing loans
and in restructuring banks, non-performing loans and intermediation costs are still high enough to keep
lending rates high in nominal and real terms and to discourage investment.
36.
The second is that weaknesses in the legal and judicial system impede corporate restructuring and
asset restructuring by the financial system. The stronger than normal links between solvency and
performance in the corporate and financial sectors in Pakistan because of the heavy concentration and comingling of political and economic powers make it especially critical that corporate restructuring
accompany bank restructuring. Future growth depends as much on restructuring industries where
overcapacity or low productivity is rampant (such as cement, textiles, and chemicals) as on new
investments. And future growth requires a financial system that facilitates the reallocation of resources
from low to high efficiency sectors or firms. Thus the long-term success of financial sector reforms,
including bank privatization, hinges on strengthening the legal and judicial framework to facilitate the
exit of firms and the foreclosure or restructuring of distressed assets by financial institutions. While some
progress has been made (in bankruptcy law, for example), much more remains to be done.
Pakistan Country Assistance Strategy
Annex II
Page 12 of 23
Investment Regime Still Not Business Friendly
37.
During the 1990s, the government tried to make the investment regime more attractive to
foreigners, especially in certain sectors of the economy. It established the Board of Investment as a “onestop shop” to facilitate and coordinate the needs of foreign (and domestic) investors. Notably, the new
investment policy announced in 1997 lifted the requirement that foreign investors get government
approval for projects. It also eliminated foreign exchange restrictions; allowed remittances of salaries,
profits, and dividends without restriction or approval of the State Bank; removed all controls on the
transfer of technology; and eliminated ceilings on the amount of royalties or technical fees a technology
buyer may pay.
38.
Yet the latest Foreign Investment Advisory Service study (FIAS 1999) found that, “Pakistan is an
inefficient investment location, with the country becoming less attractive relative to other investment
locations in the Region.” Moreover, “whilst appropriate on paper, [the current foreign investment regime]
is simply not implemented at the ground level.” The study noted that the investment policy was subject to
both inconsistent interpretation and arbitrary changes. FDI was encouraged through directed incentives
such as user-based import tariff concessions or exemptions (on raw material and other inputs), high tariff
protection on output, exemptions from income and sales taxes, exclusive licenses or franchises, and other
special treatment. Implementation of these measures failed to create a transparent and level playing field
for investors, instead encouraging rent-seeking at the expense of international competitiveness and
productivity growth.
39.
Lack of policy consistency
and predictability, uncertainty over the
implementation and timing of policy
statements, and lack of accountability
and transparency remain serious
problems. Events of the late 1990s—
international political sanctions, the
military coup, a balance of payments
crisis, foreign exchange restrictions,
and the independent power producers
debacle (Box 1) further undermined
already low investor confidence in
Pakistan.
Thus
substantial
impediments, uncertainty, and risks
continue to face foreign investors,
imposing high transaction costs for
investing and doing business in
Pakistan.
Policy Instability, Tax
Administra tion, and Regulation
Raise the Cost of Doing Business
Box 3: Consultation with the Private Sector
Three main themes emerged from the Country Assistance Strategy
consultations with the private sector:
• Tax administration and the role of the Central Bureau of Revenue.
• Regulations.
• Weak infrastructure.
All three raise the cost of doing business in Pakistan. The weakness in
regulatory environment is a consequence of policy reversals but also of
weak and nontransparent implementation within the public sector. It is
estimated that senior management spends some 10-20 percent of its time
dealing with the government. The regulatory burden is particularly serious
for small and medium-size enterprises.
It impedes their growth,
discourages new firms from entering the market, and encourage firms to
remain in the informal economy (See also Annex I).
40.
In the 1999 World Bank
World Business Environment Survey
(Chart 11) and CAS discussions with
private sector in 2001 (Box 3), firms
identified policy instability as the
leading constraint on the operation
and growth of private sector activity (91 percent of firms considered it a moderate or major obstacle to
business), followed by difficult access to financing (83 percent of firms), tax administration and
regulation (80 percent of firms), and infrastructure. The business climate appears much less attractive in
Pakistan Country Assistance Strategy
Annex II
Page 13 of 23
Pakistan than elsewhere in all its aspects. Policy instability and difficult access to financing (especially
high interest rates and high collateral requirements) stand out as particularly damaging to the business
climate (Chart 11). The policy instability reflects the unfolding macroeconomic crisis of the late 1990s,
policy slippages or reversals of successive governments throughout the 1990s, and the deteriorating
governance in public institutions and economic management that created a lack of transparency and
predictability in government policies. While tax administration is a critical constraint for the entire
private sector, regulation is more of a binding constraint for small and medium-size-enterprises (Box 3).
This perception is also reinforced by the results of a recent SME survey carried out in Pakistan in which
more than 80 percent of the respondents cited regulations as a major barrier in their smooth functioning
(Charts 12 A&B).
41.
Taxation and tax administration. After policy uncertainty and financing, firms rank taxes and
regulations as the biggest constraint to business in Pakistan (Table 6 and Charts 12 A&B). Across the
board—large firms and small, manufacturing firms and services—they cite high taxes as the chief tax and
regulatory constraint, a verdict consistent with the overall regional rankings in Chart 11.
Chart 12: Taxation & Regulatory Constraints for SMEs in Pakistan
A
B
Government: Intensity of Problems
Regulation and Other Govt. Related Issues
80
20
30
20
%
40
50
% 40
16
10
9
44
42
36
Note: Multiple responses were allowed; total may exceed 100
35
Trade Union
Restrictions
Cost of
Licenses
Number of
Required
Licenses
Investment
Regulations
Labor
Regulations
High cost of
Raw
Materials
Tax
Instabiliy
in gov't
policies
High cost
of inputs
Municipal
corp.
hurdles
Police
problems
High
taxes
45
30
27
10
0
0
Bribes
51
Exports
Regulations
40
39
Import
Regulations
70
60
56
60
67
Note: Multiple responses were allowed; total may exceed 100
Source: SME Policy Note, World Bank, June 2001.
42.
Tax administration is the second biggest regulatory constraint, especially for large firms. Smaller
firms are more likely to underreport income. Some 80 percent of firms estimate that “typical” firms avoid
some portion of taxes by underreporting income, with 22 percent reporting less than 50 percent of their
income, the highest portion in the South Asia region. The private sector is highly critical of the Central
Board of Revenue, which they consider to be corrupt and inefficient, with too much discretion.
Pakistan Country Assistance Strategy
Annex II
Page 14 of 23
Table 6: Taxation and Regulatory Constraints by Size and Sector in Pakistan, 1999
(percentage of firms ranking obstacle as moderate or major)
Constraint
Small
Medium
High taxes
86
74
Tax regulations
75
65
Customs regulations
72
65
Business regulations
64
58
Labor regulations
57
53
Environmental regulations
62
44
Foreign investment
46
48
Fire/safety regulations
43
46
Source: World Business Environment Survey, 1999.
Large
Manufacturing
Services
Overall
75
90
71
70
60
44
45
33
77
72
67
64
54
49
40
42
79
76
74
63
60
56
53
46
79
74
69
63
56
50
46
43
43.
Recognizing these problems, the government set up a Task Force on the Reform of Tax
Administration. The radical reforms it recommended in an April 2001 report, endorsed in the 2001
budget, focus on reducing the number of taxes at federal and provincial levels as well as tax rates and
penalties. The program also calls for simplification of assessment and collection procedures, reform of
labor levies, greater efficiency in dispute resolution, broadening of the tax base, and honesty and
efficiency in administration.
44.
The business community welcomed the recommendations of the Tax Reform Task Force and its
subsequent endorsement at the highest level. The recent establishment of a tax reform wing under a new
Central Revenue Board chairman, charged with preparing a medium-term implementation strategy for the
reform program, is another move in the right direction. Timely implementation of proposed reforms will
be key to restoring private sector confidence.
45.
Regulation. Regulatory constraints include lack of predictability of laws and regulations related
to customs, business, labor, environment, and foreign investment, among others (see Table 6). The
World Bank Business Environment Survey of 1995 had already identified the constraints caused by
Pakistan’s poor business climate (Private Sector Assessment 1996). Recent survey work suggests that
conditions have worsened. Most regulatory roadblocks place a bigger burden on small firms than large
ones, encouraging them to remain in the informal sector (see Table 6 and Charts 12 A&B). Because trade
regulations protect many domestic producers, it is not surprising that few firms consider the trade regime
to be especially burdensome.
46.
What many businesses object to in the regulatory framework is the uncertainty: regulations are
unpredictable, changing without advance notice or consultation, and interpretations are inconsistent. On
average businesses report being informed in advance about changes in policies that affect them “seldom”
or “sometimes,” with 45 percent of enterprises reporting that they are “never” or “seldom” informed in
advance. More than a third (37 percent) of the firms in the Pakistani sample agreed to some extent that
information on laws and regulations is not easy to obtain.
47.
To improve the regulatory environment for businesses, the government recently established a
Committee for Reforms in Regulatory, Legal and Policy Environment. Building on the government’s
ongoing regulatory reforms, the committee is mapping out a comprehensive program of regulatory reform
including the implementation steps needed to lower costs of doing business and enhancing international
competitiveness of industry in Pakistan. Because of the many sectors involved and the links between the
center and the provinces in regulatory affairs, coherent and effective reform will require significant
coordination among a wide range of government departments and ministries. And it will require strong
commitment over time.
Pakistan Country Assistance Strategy
Annex II
Page 15 of 23
Weak Re gulatory Framework in Infrastructure
48.
Infrastructure services also suffer from a weak regulatory framework that hurts the investment
climate by inhibiting private investment in infrastructure, undermines the competitiveness of the
economy, and exacerbates macroeconomic vulnerabilities. Since the mid-1990s, the government has
pursued policies aimed at attracting private sector investment in infrastructure. However, progress has
been impeded by the risks stemming from a weak and unstable regulatory framework for the efficient
provision of infrastructure services.
49.
Although Pakistan was one of the first developing countries to open its power sector to private
investment in the mid-1990s and thereby eliminate much of the generation capacity shortage, its
mishandling of the independent power producers crisis of 1997 shattered private sector confidence,
particularly for foreign investors (see Box 1). Despite the new capacity, reliability and efficiency remain
poor, the sector’s financial position has deteriorated, and only a little more than half the population (about
55 percent) has access to electricity.
50.
To reinvigorate the power sector reform program, the government, in a new policy statement in
1998, reiterated its commitment to the establishment within 5–10 years of a competitive power system
made up of autonomous, financially viable, and largely privately owned generation, transmission, and
distribution entities. An independent regulatory agency (NEPRA) would oversee the sector. The first
phase of the program, now under implementation, focuses on the financial restructuring and
corporatization of WAPDA and KESC. WAPDA’s new management has taken steps to improve its
efficiency and financial performance through a focus on loss reduction, improved billing and collections,
and redress of WAPDA’s financial difficulties. For KESC, after several years of trying to improve the
utility’s operational and financial performance, the government has opted for fast-track privatization, with
the help of the Asian Development Bank.
51.
Even with these measures, many regulatory implementation issues remain. Tariff standards and
rules are vague, and clear policy guidelines from the government on future competitive market structure
are lacking. Private investors are unlikely to respond unless further progress is made on creating an
enabling regulatory environment in the sector by strengthening the independence of the regulatory agency
(NEPRA), reducing regulatory risks by moving toward formula -based and multiyear tariff setting
mechanisms, and establishing a legal framework for safeguarding foreign investments.
52.
In recent years, Pakistan’s already weak external balances worsened, in part because the
government was unable to interest the private sector in investing in natural gas production when demand
for imported oil and oil prices were rising. The bill for imported oil almost doubled, from $1.5 billion in
1999 to just under $3 billion in 2000, bringing home the macroeconomic importance of developing the
country’s domestic natural gas resources to reduce vulnerability to external shocks. Uncertainty about
government policies has perpetuated the dominance of state enterprises in production, transmission, and
distribution at the cost of the sector’s development.
53.
While gas exploration was encouraged by promises of remunerative well-head prices under the
1994 petroleum policy, production never materialized because the policy was not implemented. A weak
regulatory framework and contract disputes discouraged further investments by the private sector. The
main regulatory issues are low and administered prices at the retail level, involving heavy subsidies to
fertilizer and households; low and administered well-head prices for existing state-owned producers;
inability of new producers to enter into long-term contractual relationships with consumers because of the
administered gas allocation system. Additionally, pricing arrangements for the state-owned transmission
and distribution companies discourage efficiency and cost savings and are inconsistent with the gas
pricing regime. The institutional environment is also defective; the Ministry of Petroleum and Natural
Resources plays the conflicting roles of policymaker, regulator, and market participant.
54.
The government has taken steps to redress some of these inadequacies, appointing experienced
staff, for example, to the management and boards of state -owned companies. A new gas pricing
framework adopted in March 2001 uses international oil prices in setting well-head prices; phases in
Pakistan Country Assistance Strategy
Annex II
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adjustments in consumer prices that reflect cost of service; phases out subsidies over a three-year period,
except for existing fertilizer contractual obligations and for a lifeline rate for households; and establishes
a Gas Regulatory Authority. The new fertilizer policy, however, is inconsistent with the new gas pricing
framework in many respects. The latter continues a dual (feedstock and fuel) gas pricing regime that sets
domestic feedstock gas prices at parity with Middle East prices (around $0.77/mmbtu) when Pakistan’s
opportunity cost of gas is considerably higher (around $1.76/mmbtu) and introduces a new feedstock
subsidy for future plants with a 10-year price lock-in feature.
55.
The inefficient transport system is another drag on Pakistan’s competitiveness. The World Bank
estimates that transport weaknesses cause annual competitiveness-based losses of some Rs.220 billion, or
6 percent of GDP. Similarly, inefficient public sector utilities impose a heavy fiscal burden on the
economy at a time when more public investments in infrastructure and human development (health,
education) are badly needed.
56.
The current government is addressing some of the key transport problems. The National
Highway Authority, rather than focusing on constructing new roads, is emphasizing completing ongoing
projects, upgrading existing corridors, and mobilizing resources for maintenance through tolls. The new
management of Pakistan Railways cut losses in 2000 some 25 percent over the previous year by reducing
excess staff, rehabilitating assets, and shedding non-core operations. The freight business has huge
potential and could interest private sector investors if the right framework were in place, but Pakistan
Railways is reluctant to give up its freight business, which cross-subsidizes its passenger services.
Although Pakistan Railways had once indicated a willingness to consider letting private freight operators
run their own trains in exchange for a track access fee, the government’s draft National Transport Policy
(March 2001) contains no mention of private sector participation in any form. Furthermore,
implementation has stalled on a government decision to gradually phase in private operating concessions
at all ports. In aviation, the sale of shares of Pakistan International Airlines to strategic investors has been
proposed, but substantial pre-privatization technical and financial restructuring would be needed to attract
private sector interest.
57.
Pakistan’s rich and extensive mineral resources (zinc, copper, gold, iron ore, coal, marble, among
others) could, under conservative assumptions, potentially contribute annual foreign exchange earnings of
$1.7 billion, or 3 percent of GDP and tax revenues to central and local governments of $200 million a
year. Development of mineral resources would also act as a powerful engine of growth for SMEs and
local community development in largely remote regions of the country, such as Balochistan. Today,
however, mineral exploitation contributes barely 0.4 percent of GDP despite government’s interest in
developing the sector.
58.
The mining industry is dominated by the public sector through federal and regional development
corporations, with little foreign investor involvement. There is little or no modern exploration, and what
little development has occurred has been restricted to simple technologies and has been poorly planned
and managed, especially the environmental and social impacts. The main reasons for the missed
opportunities are the uncertainty created by the inadequacies of min ing concession rules, which fail to
meet international standards; lack of supporting infrastructure (such as railway freight); and perceptions
of political and security risk associated with the geographic location of the bulk of mineral resources
(Balochistan).
59.
The federal government recently issued its National Minerals Policy, which approaches
international standards and provides a basis for improving the business environment. It has also created an
export processing zone arrangement for export-oriented mineral development (for example, Saindak
prospect). These recent developments are steps in the right direction, but they remain untested. And more
remains to be done to bring the mining regulatory structure up to international standards and make it
attractive to foreign investors. Modernization of the regulatory framework rests largely with provincial
governments but will also require further actions by the federal government (such as in foreign exchange
and trade regulations) to provide the right incentives to private investors and to provincial governments to
modernize.
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Growth Has Been Unsustainable
60.
The pattern of growth that unfolded during the 1990s proved so unsustainable that ushered in a
macroeconomic crisis late in the decade, culminating in the balance of payment crisis of 1998.
Ultimately, although quantitative analysis remains to be done, it appears that productivity growth fell
dramatically during the 1990s, making the pattern of growth unsustainable. As the previous discussion
illustrates, the deteriorating business climate of the 1990s failed to provide the appropriate incentives to
private investors or to public utilities to pursue productivity growth.
61.
Macroeconomic stabilization is the first priority for reducing poverty and improving the business
climate since it will reduce policy instability, the leading deterrent to business confidence. The
stabilization program (fiscal adjustment, flexible exchange rate regime, and tight monetary policies)
together with high indebtedness and limited external financing leave the central government with very
little maneuvering room for encouraging private sector-led growth. In particular, the stabilization
program imposes strict limits on the capacity to increase public (and private) investment in the economy.
62.
Especially under tight macroeconomic constraints, faster private sector-led growth and poverty
reduction hinge on higher productivity growth and more efficient allocation of investment and resources
through sustained structural reforms. This will mean improving the incentive regime overall and reducing
regulatory risks in the provision of infrastructure.
Summary
63.
To sum up, the diagnostic section elucidates that it is the government’s failure to maintain a
favorable investment climate in the country that has constrained the growth of a dynamic, competitive and
sustainable private sector in the 1990s. To turn around the declining trend of investment and exports, the
following key areas of concern for private sector must be addressed:
•
An inadequate incentive regime resulting from a combination of unfinished trade policy reforms,
continuing reliance on sectoral industrial policies, an unfriendly investment regime, poor tax
administration, excessive regulatory burden, and a recurring pattern of policy instability.
•
Risky and weak regulatory framework in infrastructure, particularly, in the key growthsupporting sectors of gas, mining, power and telecom.
•
Weak financial policies and institutions that discourage availability of financing for private
investment.
•
Risky macroeconomic environment.
64.
The current government of Pakistan is determined to improve the investment climate in the
country. While the vision for private sector-led development is well-articulated, the country is still in the
process of formulating a strategy to realize the vision. Signs that some of the key investment climate
issues are beginning to be tackled are apparent.
The Government’s Evolving Private Sector Strategy
65.
In its recent Interim Poverty Reduction Strategy Paper (I-PRSP) - a document that reflects the
strategy papers prepared by the central government since October 1999 and the reforms implemented
since then - the government sets out a sweeping and ambitious program of political, economic, and
institutional reforms aimed at establishing the foundations of an open, modern, and prosperous society. It
seeks to revive broad-based economic growth and eliminate poverty and social inequities through three
key strategic initiatives: a program to improve macroeconomic stability and government effectiveness; a
reform agenda in key sectors to foster broad-based growth; and a social and human development agenda.
66.
Getting the macroeconomic fundamentals right and improving government effectiveness through
governance reforms and devolution are the government’s first priorities. Fiscal consolidation is
Pakistan Country Assistance Strategy
Annex II
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considered vital for curbing unfavorable public debt dynamics and boosting national savings in order to
finance higher private investment. Fiscal targets hinge on realizing the government’s projected revenue
increases—a key weakness in past fiscal adjustment efforts. Implementation of the Central Board of
Revenue reforms and measures to broaden the tax base and eliminate exemptions is crucial. The
government’s strategy also envisages rationalization of public expenditures to enable increased public
investments in education, health, and other priority areas such as infrastructure.
67.
“Sustained pro-poor economic growth, based on robust private sector activity and enhanced
investment, are the main elements of Pakistan’s [I-PRSP]. Therefore, the essence of Pakistan’s poverty
reduction strategy is to maintain an environment conducive to trade and investment, including foreign
investment” (I-PRSP, p. 23). Promoting private sector-led growth in agriculture, services, and exportoriented manufacturing will therefore be critical for accelerating growth and poverty reduction and
reducing Pakistan’s vulnerability to internal and external shocks.
68.
The paper acknowledges that the pattern of growth has not been conducive to employment
generation and has neglected external markets, productivity growth, and international competitiveness. It
attributes the slow pace and inappropriate pattern of growth to the long neglect of the agricultural sector
and misguided policie s in manufacturing, as well as an inadequate macroeconomic environment,
insufficient investments in human capital, and weak infrastructure. Accordingly, recognizing the need to
spur greater export orientation and more labor-intensive growth, it envisions complementing trade and
financial sector reforms with reforms in keys sectors like agriculture, industry, infrastructure, and
information technology.
69.
To revive private sector growth, sectoral committees will be constituted with all key stakeholders
to develop recommendations for the textile, chemical, engineering goods, automobile, and edible oil
sectors. In manufactured exports, the prime concern is to encourage the production of value-added
products in Pakistan’s textile exports, mainly garments. As these are labor intensive, they also have high
potential for employment generation. Within manufacturing, SMEs have been earmarked as holding the
greatest potential for generating employment and creating an export base in the country. The focus is on
programs for developing managerial, technical, and informational support for SMEs.
70.
In trade, the government intends to reduce maximum tariffs to 25 percent by 2003 and the
number of tariff slabs to three, to rationalize duty drawback and export-financing schemes for exporters,
and to comply with the WTO trade regime and standards.
71.
Recognizing the grave inefficiencies in transport infrastructure (railways, roads, and aviation)
and its role as a catalyst in economic growth, the government is reorienting infrastructure priorities. In
the energy sector, initiatives have focused on deregulation, liberalization, privatization, and greater use of
indigenous resources and on a shift from thermal and furnace oil to hydroelectric, gas, and coal.
Attracting foreign investment and entering into new alliances with international oil and gas companies are
important goals. The oil and gas sector has earned priority because of its potential role in reducing
macroeconomic vulnerability by providing a dependable domestic source of energy to replace the high
foreign exchange cost of imported oil. A new investment policy for offshore oil and gas exploration was
announced in January 2001, and the government plans to attract foreign investments in both upstream and
downstream sectors. Marble and gem industries will be encouraged near the point of deposit, to add
value to currently low value-added products.
72.
Although the I-PRSP provides an impressive vision for private sector development (PSD), the
document falls short of clarifying a PSD strategy that translates this vision into a comprehensive and
cohesive road-map ahead.
73.
The Bank has tried to assist the government in the process of formulating its private sector
strategy. The process of working with the government in developing their PSD agenda has strengthened
in the past eighteen months.
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The World Bank Group’s Private Sector Assistance Strategy
74.
The World Bank Group (WBG) private sector strategy aims to support the Government of
Pakistan (GOP) in encouraging dynamic private sector-led growth that can reduce poverty more
effectively, while reducing macroeconomic vulnerabilities, and fostering productivity growth and
efficient resource allocation. Based on WBG’s diagnostic work, this would be achieved by supporting the
government in pursuing the following outcomes:
•
Establishing a more neutral incentive regime that significantly reduces the apparent bias against
exports, labor-intensive industries and SMEs, and productivity growth in key industries; key
elements of this outcome include: further trade liberalization; policy adjustments to facilitate the
reallocation of resources from less to more efficient industries and firms, and restructuring of
large scale manufacturing industries.
•
creating an investment friendly regime that is attractive to foreign and domestic investors; key
elements include: transparent trade policy formulation, deregulation, tax administration reform
and policy stability.
•
Strengthening the financial sector to mobilize resources for private investment; key elements
include: commercial bank privatization, development of capital markets, and expansion of
commercial microfinance.
75.
While the outcomes being sought are clear, the Bank still needs to come to an agreement with the
government on a shared comprehensive PSD agenda. Already in the last eighteen months, the process of
working with the government, through continued dialogue and analytical work, has been enhanced. This
process has included:
•
Analytical inputs: The Bank has provided inputs to policy-making through sectoral notes on
fertilizer and cement industries, an Investment Climate note by World Bank’s Chief Economist,
and an SME Policy note based on a country-wide survey; IFC has provided advice on financial
market development, including reviews of insurance and housing finance.
•
Capacity building: Given that the government has been responsive to analytical inputs and
dialogue, the Bank has followed on its support through capacity building efforts. Amongst other
things, this has included: (i) an IDF grant to push forward the deregulation agenda through the
recently established Committee for Reforms in Regulatory and Legal Policy Environment; (ii) an
IDF grant to support the government’s championing of tax administration reforms through the
establishment of a Task Force on Tax Administration Reforms in 2000. Based on the
recommendations of the Task Force, a program of reform was approved in November 2001 by the
President; the Bank is providing a Project Preparation Facility (PPF) to implement and prepare a
project for restructuring of tax administration, along the lines recommended by the Task Force;
and (iii) in response to a government request, a three-day WTO training workshop was organized
by the WBG, in joint sponsorship with the Ministry of Commerce. Aside from disseminating
information regarding WTO, its requirements and implications, it helped to build capacity within
the government.
•
Raising awareness: The Bank has initiated work to assist the government in determining priority
reforms areas -- the on-going Investment Climate Study (ICS) to help identify the key bottlenecks
in investment climate in Pakistan, is an example of one such initiative. The Bank is undertaking
this study in joint collaboration with the Small and Medium Enterprise Development Authority
(SMEDA) so as to help build capacity within the country to undertake this task on a regular basis.
•
Desk-based review services: In response to government’s request, the Bank has provided timely
desk-based review of its new Competition Law which may soon replace the antiquated
Monopolies and Restrictive Trade Practices Ordinance, 1970. Recently, an informal review was
also provided for the proposed Pharmaceutical Policy. In both cases, the Bank was able to draw
on expertise within the networks.
Pakistan Country Assistance Strategy
Annex II
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76.
To provide continuing support to GOP for its evolving PSD strategy, the World Bank Group will
focus on four key areas, selected on the basis of WBG’s diagnostic and their impact on growth and
poverty reduction, and of the Group’s comparative advantage:
•
Supporting economy-wide policy and institutional reforms that improve the overall incentive
regime and investment climate, and catalyzing private investment in response to these
improvements;
•
Supporting the establishment of regulatory frameworks in the key growth-supporting sectors of
gas, mining, power and telecom, and catalyzing private investments under these new frameworks;
•
Building the knowledge base on constraints to private sector development; and
•
Supporting the further development of the financial sector to improve availability of financing for
private investment.
77.
In alignment to the outcomes being sought, support by the WBG will be provided in the form of
following instruments:
•
Policy dialogue and adjustment lending to support the implementation of macroeconomic and
sectoral reforms aimed at improving the investment climate and overall incentive regime;
•
Advisory work to support institutional and regulatory reform, including privatization;
•
Analytical work to improve understanding of constraints to private investment and productivity
growth, and identify institutional, policy and regulatory frameworks which will encourage private
investment and productivity growth;
•
Equity and loan investments and guarantees to mobilize private investment in reformed sectors
78.
The World Bank will take the lead in analytical and advisory work, drawing on the perspectives
of IFC and MIGA, and in supporting GOP reforms. IFC will invest equity and loan finance, and make
partial credit guarantees; MIGA will offer political risk insurance through its guarantee program. The
matrix below summarizes the Private Sector Strategy and World Bank Group interventions in support of
them.
World Bank
Analysis &
Advisory
Economy wide
Key
growth
sectors
Financial
sector
Macro
Micro
Gas & Mining
Power &
Telecoms
Banks
NBFIs
•
•
•
Policy
Dialogue &
Adj.
Lending
•
•
•
•
•
•
IFC
TA
MIGA
Investment
Advisory
G’tees
•
•
•
•
•
•
•
•
•
•
Improving the Investment Climate
79.
The World Bank will support economy-wide policy and regulatory reforms through balance of
payment operations and technical assistance in areas such as tax administration by the Central Board of
Revenue and deregulation of industrial, business, and labor regulations. This dovetails with the World
Bank’s program of support for strengthening government effectiveness. Strengthening public institutions
Pakistan Country Assistance Strategy
Annex II
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like the CBR both improves the accountability and efficiency of the public sector and improves the
investment climate for the public sector.
80.
Consistent with the Bank’s earlier diagnostic, priority will be given to elements of the trade
regime that discourage export orientation and participation in global production sharing, productivity
growth, and international competitiveness. Actions would include timely implementation of scheduled
tariff reforms, the phasing out of regulatory duties that still provide protection well beyond the maximum
tariff rates, the elimination of SROs that distort resource allocation or undermine business confidence, and
reforms of the tax administration to eliminate the shortfalls of general sales tax refunds and duty
drawbacks to exporters. External trade reforms would need to be complemented by selected economywide (e.g., labor, business) or sector-specific regulatory reforms to relieve constraints that are holding
back private investment (domestic and foreign) and productivity growth.
81.
The Bank will continue to encourage the federal and provincial governments to pursue the trade
liberalization and modernization of industrial, business and labor regulations that are already under way.
A Committee for Reforms in Regulatory and Legal Policy Environment was recently established (January
2002) to review commercial and labor regulations with a view to eliminate those that constrain
competition and/or impose unnecessary compliance costs. A World Bank team has started to support the
Committee and will work with the government in identifying policy measures in these areas that could be
supported by adjustment lending.
82.
At the provincial level, the Bank’s dialogue and proposed assistance to Sindh and NWFP, which
sought Bank’s assistance, will also focus on reforms that fall within the provinces’ purview (such as labor
and industrial regulations) to improve the investment climate.
Key Growth Sectors
83.
The World Bank Group will be selective in terms of addressing specific sectoral policy and
regulatory issues, and promoting private investment. Priority will go to sectors with significant impact on
economic growth and the balance of payments, i.e. gas, mining, power and telecom sectors.
84.
Top priority will go to natural gas, which offers the largest potential for reducing macroeconomic
vulnerabilities, attracting FDI, restoring private sector confidence, and encouraging efficient substitution
of domestic resources for imports. Consistent with the government’s vision, the objective will be timely
and consistent implementation of regulatory reforms to create an environment for accelerated
development of gas reserves. The strategy will be to support implementation of the planned program of
retail and producer price adjustments, including bringing feedstock gas prices to the fertilizer industry in
line with prices to the rest of the industrial sector and reflecting any fertilizer subsidy in the budget. The
strategy includes privatization of PPL, restructuring of transmission and distribution companies, and
liberalization of transmission under a common carrier regime. These reforms will be supported by the
gradual dismantling of the administered gas allocation system and implementation of a new regulatory
regime for transmission that permits both contracting between large parties and the introduction of new
tariffs. The World Bank would concentrate on advice and financial support to expedite introduction of an
appropr iate, fully operating regulatory framework. IFC would consider financing appropriate business
opportunities to increase the country’s gas reserves by supporting early development of newly discovered
fields and improvement of the gas transmission infrastructure.
85.
In petroleum, the Bank Group will continue to support the government’s reform guided by the
important program of analytical work carried out in FY01. Over the next three years the focus will be on
advancing the implementation of the deregulatory reforms to strengthen competition in the sector and
assisting with the privatization of the Oil and Gas Development Corporation Ltd and Pakistan State Oil
Ltd expected to take place by March 2003.
Pakistan Country Assistance Strategy
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86.
The World Bank Group will accord greater priority than in the past to development of the mining
sector, because of its potential importance in improving macroeconomic stability through external and
fiscal accounts and broadening access to growth and employment opportunities geographically and
socially. While the expected benefits will materialize beyond the planning horizon of this CAS, the
immediate objective of the World Bank Group will be to support establishment of a modern regulatory
environment for mining that enhances Pakistan’s competitive position in attracting private investment and
encourages environmental and social sustainability. The strategy will focus on supporting the federal and
provincial governments in their elaboration and implementation of a modern regulatory framework and
improving their capacity to manage the instability of government revenues associated with extractive
industries. The Bank will respond to client "pull" from both central and provincial governments (such as
the recent demand from the Sindh Government), for assistance in reforming the legal/regulatory and fiscal
frameworks and developing institutional capacity to facilitate and promote environmentally and socially
responsible private sector mining development both for coal and for non-fuel minerals.
87.
The Bank Group will contin ue its deep engagement in the power sector. The power sector
reforms will continue to be supported through policy dialogue and adjustment lending which, by
strengthening macroeconomic stability and reducing exposure risk, is expected to improve the investment
climate for private investment, particularly for the privatization of the distribution companies. In
addition, the Bank Group will support financially through programmatic investment lending the
privatization of the distribution companies. In partic ular, IFC will aim to mobilize private investment for
the power sector, particularly for the privatized distribution companies. IFC will also continue to act as
adviser to the government on the privatization of Faisalabad Electric Supply Company (FESCO).
88.
Since improved connectivity is essential for growth, including that of the IT industry, and for the
poor to benefit from technological change, the Bank Group will continue its dialogue with the
government on an adequate regulatory framework to attract private investment. In FY02, MIGA
supported a software development project in Karachi by Japanese investors and is looking at a telecom
project in FY03. IFC and MIGA will seek opportunities to support the growth of the IT industry.
Building the Knowledge Base
89.
In order to underpin this assistance strategy and the policy dialogue, the World Bank Group will
need to build its knowledge base about the main impediments to an improved investment climate. While
the broad impediments have been identified --trade and investment regime, industrial policies, tax
administration, business and labor regulations-- the precise microeconomic distortions of the investment
climate and incentive regime and their relative impact on productivity growth, resource allocation, and
private investment need to be identified and quantified more precisely. For example, more needs to be
known about the impact of the current and prospective (2003) trade regime on private sector incentives in
order to judge the effectiveness of trade reforms in encouraging stronger and more export-oriented
growth.
90.
In documenting these domestic constraints, priority will be given to industries with the potential
to contribute significantly to macroeconomic stability, growth and employment. The textiles and clothing
industry is an obvious candidate. With close to 80 percent of merchandise export earnings, the industry
approaches the imminent phase-out of the Multi-Fiber Arrangement in need of crucial domestic reforms
that can put it back in competition after a decade of losing ground (see Table 3). Another candidate might
be the sugar industry. Current sugar policies that fuel the huge sugar cycles that destabilize
manufacturing and agricultural growth also retard productivity growth in the mills and on the farm and
discourage more efficient use of scarce water resources.
91.
In addition to an informal private sector assessment jointly prepared by the IFC and the World
Bank in FY01, and an SME Policy Note describing the key features of SMEs and their constraints
(emerging from a business survey also conducted in FY01), the program of analytical work includes: (i) a
Pakistan Country Assistance Strategy
Annex II
Page 23 of 23
Development Policy Review (to be completed in FY02) which will provide the Bank’s assessment of the
adequacy of the current development policy agenda to achieve rapid growth and poverty reduction; (ii) a
Trade Policy note (to be completed in FY04); (iii) an FDI Administrative Barriers Reform study to be
conducted by FIAS; and (iv) an Investment Climate and Economic Performance Study (to be completed
in FY03). The latter aims to relate key aspects of the investment climate (basic economic infrastructure,
and regulatory and governance frameworks) with the performance and productivity of private
manufacturing firms, small and large. To build domestic capacity for this analytical and monitoring work
in the future, the study is being carried out jointly with SMEDA.
Reforming the Banking and Financial System
92.
In response to the financial crisis of 1996, implementation of the government’s banking and
financial sector strategy started in earnest in 1997 and is well advanced. There is broad agreement
between the government and the Bank on the vision for Pakistan’s financial system - a market-oriented,
predominantly privately owned banking and financial system that operates under a strong regulatory
framework, is supported by an effective legal and judicial system, mobilizes the capital needed to finance
rapid private sector growth, and improves access to financial services by the poor. Consequently, the
Bank Group and ADB have been actively supporting implementation of the strategy with adjustment
lending, restructuring and privatization operations, technical assistance to strengthen the financial
infrastructure, including the payments system, credit information and anti-money laundering, and
expanding the micro-finance sector. Much progress has been made in strengthening prudential
regulations and supervision for banks and the capital market, and this needs to be extended. Priorities
include adhering to the privatization schedule for the NCBs, closing most of the DFIs, improving the
legal and judicial system for financial contract dispute resolution, and achieving full market integration by
phasing out special credit programs and closing tax and regulatory arbitrage opportunities.
93.
IFC will support the emergence of strong private commercial banks and Non-Bank Financial
Institutions through selective investments. The IFC will also support the development of new financial
products to better meet the needs of the private sector (e.g., long-term finance for infrastructure, access to
finance in agriculture/agribusiness, guarantees for SME finance). Such products should also expand
access to financial services to new clients (e.g. the bankable poor through micro-finance institutions or
leasing institutions) and to under-served SMEs.
Pakistan Country Assistance Strategy
Annex III
Page 1 of 1
ANNEX III: BANK PARTNERSHIPS WITH BILATERAL AND MULTILATERAL AGENCIES
Gender
The Interagency Gender and Development Group, comprising all major donors, is supporting
various activities to promote gender equity in Pakistan. The Bank, the government, and major
bilaterals and multilaterals, including all UN agencies, are also working together to strengthen
the government’s analytic capacity on gender sensitive policies. Specific projects include:
"Women's Political Participation and Gender Sensitive Strategy”, a UNDP- Gender Equality
Umbrella Project; “Family Protection” and “Gender Equality Project” by DFID; and “Gender
Reform” TA grant by AsDB.
Power
Reforms
Power Reforms are supported by the Bank and other donors, particularly AsDB and Japan. The
Ghazi Barotha Hydropower project is one such example which is supported by a number of
donors including the Bank, AsDB, JBIC, KfW, IDB, EIB. Also, there is greater selectivity
among various donors, with the Bank supporting WAPDA restructuring while AsDB taking on
KESC reforms.
Oil and Gas
The Bank, CIDA and AsDB are supporting policy reforms through TA and Grant funds.
Provincial
Reforms
The Bank is supporting the economic reform programs of the Sindh and NWFP provinces while
AsDB is assisting Punjab on public resource management.
Devolution
A number of development partners are supporting the Government’s devolution program. The
UNDP is leading the effort while the Bank is focusing on areas where it has a comparative
advantage, such as, planning and budgeting, and social service delivery. An IDF grant has
already been provided to the National Reconstruction Bureau.
Child Labor
The Government of Pakistan has initiated over the past decade a major campaign to meet the
challenge of child labor, including enactment of key legislation prohibiting child labor in
hazardous occupations and bonded labor, joining the ILO Program for Elimination of Child
Labor (IPEC). The Bank is collaborating with ILO in building partnerships with the private
sector and NGOs in tackling the child labor issues.
Poverty
Reduction
The Bank, along with other major donors, particularly AsDB and DFID is supporting key aspects
of the government’s Poverty Reduction Strategy (PRS). A Workshop was recently organized
with DFID and Bank support on developing indicators to measure the performance of social
services delivery within the PRSP framework.
Rural Water
Supply
The Water and Sanitation Program (WSP) is supported by 15 bilateral and multilateral donors,
including the Bank.
Agriculture and
Irrigation
The Bank and other major donors, including AsDB and JBIC, have pooled resources to support
policy reforms and investments in irrigation and drainage under the Government’s National
Drainage Program. The Bank and the Dutch government are supporting community irrigation
programs in Balochistan. The Bank is also working with the WWF on forestry and bio-diversity.
Human
Development
The Bank, in collaboration with other donors, including DFID, KfW, has provided support to
provincial education and health projects. Future support by the Bank will take the form of
programmatic support for district delivery of both education and health services.
Health
To combat HIV/AIDS, TB, we have collaborated with UNAIDS, UN Drug Control Program at
the policy and planning level.
Pakistan Country Assistance Strategy
Annex IV
Page 1 of 4
ANNEX IV: MILLENNIUM DEVELOPMENT GOALS (MDGS), TARGETS AND SELECT OUTPUT
INDICATORS FOR PAKISTAN
1.
This note summarizes the long term indicators consistent with the MDGs for Pakistan, the
baseline data issues, and the output indicators selected as part of the monitoring and evaluation exercise
for Pakistan’s PRSP. The I-PRSP for Pakistan provides an elaborate M&E framework, outlining the
various issues surrounding the choice of indicators and the related sources of data and measurement (see
I-PRSP document, Annex 1, final version Dec 4th 2001). This note will also describe the progress made so
far on these technical issues as well as on the process of reaching a consensus on these and the
institutional accountabilities for this exercise.
Tracking Progress towards Millennium Development Goals
2.
Table 1 below summarizes the Millennium Development Goals (MDGs), and the long term
indicators that will be tracked at the national level, along with the sources for these indicators. The longterm indicators proposed to measure progress towards the MDGs are readily available from existing
databases. A few outstanding issues however remain, which require timely resolution.
! The challenge, however, is to reconcile the baselines in instances (e.g. gross enrollment rates)
where more than one source of information exist. The PRSP Implementation Committee under
the PRSP Secretariat (Ministry of Finance), in consultation with the relevant ministries and the
Federal Bureau of Statistics, would need to identify the source to be used for baseline and
tracking of such indicators. In the interim, we have recommended the Pakistan Integrated
Household Survey (PIHS 1998-99) as the preferred source, since it is a representative household
survey that is regularly fielded.1 This will also ensure that capacity-building can be focused on
the agency currently accountable for the PIHS.
! Pakistan does not have a national poverty line. The choice of a poverty line has been the source
of much debate over the years. Tracking progress towards the MDGs necessitates a decision on a
national poverty line that can be consistently updated over time to measure progress in reducing
poverty. A regional workshop sponsored by the World Bank in partnership with Pakistan
Institute of Development Economics has helped in building consensus which should result in the
selection of an official poverty line. The PRSP Implementation Committee is encouraged to play
a facilitating role in expediting this decision.
! The indicators would also need to be disaggregated at the provincial level. Setting baselines for
provincial indicators, that are consistent with those of the national indicators, is straightforward
since the data sources for the most part can be disaggregated at the provincial level. However,
targets by province will need to be worked out with provincial governments. This process is
currently being initiated by the PRSP Secretariat. Ultimately these targets are endogenous to
implementation of the devolution plan. Devolution to the district level and below is currently
underway, for which the fiscal framework is yet to be full implemented. Therefore the exercise
of setting credible targets for individual provinces can only evolve when the devolution process
has been completed. In the interim, it would be best to focus on the national levels and arrive at a
resolution for the national indicators in Pakistan.
1
The PIHS closely follows the model of the Living Standards Measurement Surveys that are fielded regularly in a number of
developing countries.
Pakistan Country Assistance Strategy
Annex IV
Page 2 of 4
3.
Given the issues raised above, particularly the ones outlined in the first two bullets, the targets
should be seen as indicative. Moreover, for some indicators that are monitorable (such as the ones in
Table 2), targets are not meaningful. Tracking progress towards MDGs, which comprise of
internationally set goals, will be challenging, where the first step will be to assess how realistic such goals
are in the specific context of Pakistan. The Bank is facilitating this process in Pakistan, using SIMSIP (a
simulation software package developed by the Bank) to assess how realistic these targets are, in
conjunction with the exercise of costing the targets. The regional workshop made a beginning in this
direction, by conducting training sessions for representatives for all countries in the region, including
those from Pakistan.
Poverty Monitoring and Tracking of Output Indicators
4.
In order to measure progress towards the MDGs, it will be necessary to track some output
indicators that change over short spans of time, are leading indicators for the goals, and provide feedback
to policymakers about the results of policy initiatives on the ground. Such indicators should be monitored
regularly – annually or semi-annually – so that the findings can inform policymakers on a continuous
basis. Table 2 provides a list of such output indicators for Pakistan. This list has evolved from the
monitoring framework provided by the I-PRSP, further refined at the workshop held by the PRSP
Secretariat to bring about consensus among provincial and district authorities on the selection of
indicators. Implementation of this monitoring mechanisms will require finalization of the set of
indicators, setting up mechanisms to collect the information, and building capacity for rapid analysis of
the data gathered.
5.
The process outlined above entails the following steps in the context of Pakistan:
! Evaluation of existing monitoring systems, like the management information systems for
education and health (NEMIS and HMIS), identifying bottlenecks and possible areas of
improvement. This is likely to be completed by May 1, 2002 with the help of DFID consultants.
! Creating a database to measure the selected output indicators; this involves identifying new data
sources, as well as developing a survey-based tool that is easy to administer, implement, and
covers a large sample that is representative at the district level. Most importantly, the analysis of
the data must be completed with a quick turnaround time, to have maximum impact on policy
formulation.
! In the context of Pakistan, given the criticality of improving service delivery, the survey tool
should collect information at the facility level, as well as the household level. This, when
triangulated with the expenditure tracking exercise (which is part of the proposed monitoring
framework), will provide a quick and effective diagnostic of progress in education, health and
targeting efficiency of the major poverty programs.
6.
We expect the full implementation of this monitoring exercise to be completed by the end of this
calendar year. A critical outstanding issue is to clarify the institutional arrangements and accountability
for implementing the monitoring exercise. Ongoing dialogue is expected to expedite this process. In the
context of Pakistan, institutional accountability and the roles and responsibilities of CIPRID and PRSP
Secretariat would need to be specified.
Pakistan Country Assistance Strategy
Annex IV
Page 3 of 4
Table 1: Tracking Progress Towards MDGs
MDGs
Economic well-being:
reducing the proportion of
poor living in extreme
poverty by at least half by
2015
Social development &
Empowerment of Women
Universal primary
education by 2015
!
!
!
!
Long Term Indicators
(Outcome)
Poverty headcount
Poverty gap ratio
Gini index of consumption
Percentage of rural population with
no ownership of agricultural land
!
!
!
Gross primary enrollment
Net primary enrollment
Literacy rate (15 and above)
Baseline (1998-99)2
!
!
!
!
32.6%
7.0
30.6
61.4%
! Targets to be determined
!
71%
!
80%
!
50.5% (urban: 66.5%,
rural: 45.2%)
42.5% (urban: 63%, rural:
34%)
!
59%
12% gap (Gross
enrollments:- Male: 87%,
female: 75%)
21% (Male: 70%, female:
49%)
!
Reduce gender disparity in
primary education by 2005
!
!
Difference in primary enrollments
(net and gross) between girls and
boys
Differences in literacy rates between
males and females
Medium-Term Targets (2004)
!
13.6 % (net enrollment);
18% (gross enrollment)
!
!
30.8% (male: 58%,
female: 27.2%)
!
Increase participation of
women in political
decision-making
!
Proportion of seats held by women
in national parliament
!
Available after national
elections in October, 2002
Reduce infant and child
(below age 5) mortality
rates by 2/3 of the 1990-91
rate, by 2015
!
Infant mortality rate
!
!
!
65 per 1000 live births
To be determined
!
!
Under-5 child mortality rate
Immunization rate (% of children
12-23 months old that are fully
immunized)
!
!
90 per 1000 live births
(127 in 1991)
116 per 1000 live births
49%
!
62%
Births attended by skilled health
personnel (doctor/nurse/ Lady
Health Visitor)
Percentage of pregnant women
using prenatal care
!
19%
!
25%
!
31%
!
50%
Contraceptive prevalence rate
!
28% (PRHFPS); 19.5%
!
39%
Population with access to safe
drinking water
Total fertility rate
Life expectancy at birth
% of TB cure rate
!
To be filled
!
!
4.5; 4.8 (PRHFPS)
To be filled
!
4.1
!
Unknown
Reduce maternal mortality
by ¾ between 1990 and
2015
!
!
!
Provide access to
reproductive health services
through primary health care
system for all individuals of
appropriate ages by 2015
Improvements in Other
Indicators
!
!
!
!
!
!
2
Data source for all long-term indicators, unless otherwise specified, are from PIHS (1998-99). Other sources are: Pakistan
Reproductive Health and Family Planning Survey (PRHFPS) 2000-01.
Pakistan Country Assistance Strategy
Annex IV
Page 4 of 4
Table 2: Output Indicators for Poverty Monitoring (measured annually)
Access
!
!
Utilization Rates disaggregated by BHU/RHC and by curative and
preventive care; Source: HMIS
% of population covered by LHWs ; Source: LHW/MIS
Quality
!
Leading indicators to monitor
health outcomes
!
!
% of FLCF (BHUs/RHCs) that were out of stock of 5 essential drugs,
or contraceptives for period of more than one month each in a given
year; Source: HMIS
% of FLCF (BHUs/RHCs) with doctors and/or female paramedic
present; Source: Proposed Annual Facility Survey
Number of female health providers trained in midwifery;
Source:Ministry/Departments of Health
% of children aged 12-23 months fully immunized against DPT-3
Source: Annual Surveys conducted by independent agencies under the
GAVI initiative
Number of functional schools: facilities with physical infrastructure – at
least a building, toilet, drinking water
Source: NEMIS
Percentage of teachers with in-service training
Source: Proposed Annual Facility Survey; NEMIS
Leading indicators to monitor
education outcomes
Quality of schooling
!
!
Availability of textbooks, blackboard and chalk, student-teacher ratio;
Source: NEMIS
Teacher absenteeism: teacher present or not at the time of survey;
Source: Proposed Annual Facility Survey
Number of children of school age currently attending school; Source:
Proposed Annual Household Survey
Social Protection/Safety Net Programs
!
Leading indicators to monitor
anti-poverty programs
!
!
!
!
Employment generated through public works programs under Khushal
Pakistan Program; Source: Proposed Annual Household Survey
Number of beneficiaries of Zakat by type of assistance and province
Number of borrowers and size of credit under PPAF and Khushali
Bank programs; Source: Proposed Annual Household Survey
Number and composition of small infrastructure projects and training
supported by microcredit
Number of beneficiaries by province (rural/urban) of the Food Support
Program; Source: Pakistan Bait-ul-Maal
Pakistan Country Assistance Strategy
Annex V
Page 1 of 6
ANNEX V: PAKISTAN COUNTRY PROGRAM MATRIX (FY03-05)
Diagnostic
Strategic Objectives &
Country Outcome
Indicators
Strategies
Country Performance
Indicators Against Strategy
Areas
WBG SelfEvaluation
Indicators
Major Related Activities
of Other Donors
• PRSP Progress
Report (FY04-05)
• Macroeconomic
Stability
• SACs (FY03-05)
• Provinces fiscal
space restored
• IMF lead role on support to
short-term macroeconomic
stabilization
WBG Instruments
Macroeconomic Stability
• Despite good
macroeconomic
management, the
external and
domestic public
debt are both quite
large and hence
there are still
concerns over the
fragility of the
external position
and future growth
prospects. The
September 11
shock has also
increased the risks
to the balance of
payment position by
making more
uncertain an early
resumption of longterm private capital
inflows as well as
increased access to
international capital
markets
• Targets from I-PRSP for
fiscal consolidation,
domestic savings, debt
• Ambitious fiscal
consolidation to
increase domestic
savings to finance new
investment and curb
unfavorable public debt
dynamics. This hinge
upon the
implementation of CBR
reform, and measures
to broaden the tax
base, including
agricultural income, and
eliminate tax
exemptions. The
strategy also seeks to
re-orient expenditures
towards the social
sectors by reducing the
costs of domestic debt,
public enterprises, and
defense spending
• Improved CBR performance
• Higher Tax/GDP
• Reduced Fiscal Deficit/GDP
• Sustainable current account
deficits
• Continued tight management
of external borrowing
• Sound financial position of
WAPDA
• Provincial
Adjustment
Reforms Credits
(FY03-05)
• Improved Public
sector management
• DPR (FY05)
• Poverty
Assessment
(FY05)
• Public Expenditure
Review (FY03)
• Annual Public
Investment
Reviews (FY03-05)
• Trade Policy
Review (FY03)
Restoring the Integrity and Accountability of State Institutions
• At the core of the
poor governance
problem in Pakistan
is the leadership’s
abuse of state
institutions,
widespread
corruption, and
disregard for the
separation of
powers and respect
for the rule of law
• Improvement in
government effectiveness
at federal, provincial, and
district levels
• Transparent budgetary
processes
• Independent auditing
• Improvement in overall
quality of financial
management thru the
MTBF
• The Comptroller
General of Accounts
(CGA) has formulated
an Action Plan to
improve financial
management
• Reforms of some of the
country’s fundamental
institutions of economic
and financial
management: the
• Ad-hoc Public Accounts
Committees (PACs) have
cleared at both the Federal and
Provincial levels the backlog of
Audit Reports not yet reviewed,
and take appropriate follow-up
action
• Furthering transparency and
accountability through
Freedom of Information,
effective functioning of the
• Country Financial
Accountability &
Assessment
(CFAA II, FY03)
• Improved public
sector, accounting,
auditing, and
reporting capacity
• PIFRA II (FY04)
• Improved public
sector financial
accountability
• CPAR II (FY03)
• Improved
procurement
• Statistical capacity building
• Accounting and auditing,
legal
Pakistan Country Assistance Strategy
Diagnostic
Strategic Objectives &
Country Outcome
Indicators
Annex V
Page 2 of 6
Country Performance
Indicators Against Strategy
Areas
Strategies
Central Bank of
Pakistan (SBP), the
Central Board of
Revenue (CBR), the
Auditor General and
Controller General of
Accounts, the police,
the judicial system,
and the civil service;
(ii) improved public
financial management,
accountability, and
increased
transparency and
information on
government activities
to facilitate public
• Oversight; (iii)
devolution; (iv) an anticorruption drive; and (v)
privatization and
deregulation to reduce
incentives for rentseeking behavior
WBG Instruments
WBG SelfEvaluation
Indicators
Major Related Activities
of Other Donors
Public Accounts Committees,
agreement to and
actions on the outcomes of
the second phase of the
CFAA, and the establishment
of a lasting institutional basis
for the National Accountability
Bureau
• Proceedings of the Provincial
PACs opened to the media.
Promulgation of a Procurement
Ordinance National
Procurement Authority
established
• Better performance evaluation,
merit-based promotions, and
training programs, as well as
the implementation of the
reforms of the pay and pension
systems
Strengthening the Enabling Investment Climate
• Heavy burden of tax
administration and
regulation, and
related corruption
• Unstable, distorted
industrial policies
• Anti-export policy
bias
• limited availability of
financing from weak
financial sector
• SME sector
particularly
disadvantaged by
the above
• Low tax and regulation
compliance costs
• Increased value added
from competitive
industries
• Increased exports
• Increased availability of
domestic financing for
private investment
• Increased employment
and value added from
SMEs
• Greater private provision
of infrastructure
• National Accountability
Bureau, Central Board
of Revenue reform to
reduce tax
administration and
corruption costs
• Deregulation Task
Force to review and
simplify regulations
• Phase out distortionary
policies in autos,
chemicals, edible oils,
textile, sugar, fertilizer
and cement sectors
• Introduce lower,
formula-based and
• Lower compliance costs
reported in business
environment surveys
• Trade Policy note
• Lower levels of effective
protection
• National and
provincial-level
adjustment lending
supporting relevant
policy reforms
• Higher FDI
• Higher exports
• Higher private investment
• Increase in output and
employment in SMEs
• Sound financial position of
WAPDA & KESC
contributing to
macrostability
• Investment Climate
study
• IFC investments
and MIGA
guarantees for
export-oriented
manufacturing and
services
• FSAP
• Improvement in
investment climate,
including regulatory
reforms to reduce
costs of doing
businessImprovemen
t in banking sector
corporate
governance,
modernization of the
central bank’s core
functions of price and
banking system
stability
• Banking sector
reforms, including
• Incentives framework
• Legal, judicial and
institutional frameworks
• Financial sector and
capital markets
Pakistan Country Assistance Strategy
Diagnostic
• High regulatory and
policy risks for
private investment
in extractive
industries and
infrastructure
Strategic Objectives &
Country Outcome
Indicators
• Development of extractive
industries
Annex V
Page 3 of 6
Strategies
multi-year tariffs setting
• Strengthen banking
regulation, prudential
standards, supervision
• Commercial bank
financial and
operational
restructuring and
privatization
Country Performance
Indicators Against Strategy
Areas
• WAPDA corporatization
completed
• Effective regulation thru
NEPRA
• KESC Privatized
WBG Instruments
• TA to SBP
• IFC investments in
private commercial
banks and NBFIs
• Bank Group
support for SME
financing
• Analytical work on
infrastructure and
extractive
industries,
regulatory and
pricing frameworks
• Capital market
development
• Support development of
microfinance, SME
finance
WBG SelfEvaluation
Indicators
Major Related Activities
of Other Donors
reduced costs,
reduced NPLs,
improved capital
adequacy, &
restructured balance
sheets
• Privatization of
banks, power & gas
utilities, and telecom
• Expanded access to
micro-credit
• Support to PRSP
• PSAS privatization
advisory mandates
for FESCO
• Strengthen regulatory
frameworks for
infrastructure and
extractive industries
• IFC/MIGA support
for private
infrastructure
• Allow private entry to
telecoms services
markets and privatize
PTCL
• Policy advice on
power sector
reform
• Complete WAPDA’s
corporatization
• IFC investments
and MIGA
guarantees in
extractive
industries
• Privatize FESCO and
KESC
• Privatize PPL, SSGC,
SNGC
Accelerate Rural Growth
• Skewed land
distribution and low
agricultural
productivity
• Higher Rural Growth
• Policy dialogue
• Weak link between
rural growth and
reduction of rural
poverty
• Improved efficiency of
institutions in irrigation and
drainage
• Support to
decentralization
strategy
• Improved and expanded
irrigation and drainage
infrastructure
• Water Resource
Management Strategy
• Strengthened
community/farmer
organizations
• Update knowledge on rural
development
• Land and Water Rights Study
• Devolution and Delivery of
Rural Services
• Rural DPR (FY03)
• Water Sector
Report (FY04)
• Provincial OnFarm Water
Management
Projects (Sindh,
NWFP)
• NDP supervision
• Full implementation
of institutional and
physical rehabilitation
reform in 1 major
canal command
(Nara Canal)
• Improved land and
water markets
• Reduced vulnerability
to drought
• The Water and Sanitation
Program (WSP) is
supported by 15 bilateral
and multilateral donors
• Agricultural policies, rural
credit, irrigation and
draingage
Pakistan Country Assistance Strategy
Diagnostic
Strategic Objectives &
Country Outcome
Indicators
Annex V
Page 4 of 6
Strategies
Country Performance
Indicators Against Strategy
Areas
WBG Instruments
WBG SelfEvaluation
Indicators
Major Related Activities
of Other Donors
Education
• Education service
delivery system in
crisis
• Low enrollment,
poor achievements,
poor quality of
education
• Very poor
governance
• Improved access to,
quality of, and equity in
primary education, moving
towards the MDG goal of
universal primary
enrollment by 2015
• Closing of the gender gap
in primary and secondary
education by 2005
• Support for the
Education Sector
Reform (ESR) at
federal and provincial
levels
• Advisory services and
technical assistance for
the reforms of higher
education
• Support to
decentralization
strategy
• Implementation of Education
Reform Strategy
• Strengthened and expanded
key public health programs,
including Lady Health Workers,
TB-Dots, EPI, polio
eradication, malaria, HIV/AIDS,
and family
planning/reproductive health
• Improved governance in social
service delivery
• Development of a reliable
monitoring system for HD
outcomes
• Successful implementation of
district based delivery of health
and education services
• National Education
Assessment
(FY03, NEAS LIL)
• Implementation of
Education Reform
Strategy
• Adjustment Credit
for Education
Sector Reform
(FY03-05)
• Improved
governance in social
service delivery
• Analytical work on
ESR and
monitoring of
MDGs
• Support to
Provincial Reforms
(Sindh, NWFP,
FY03-05)
• Project assistance(USAID,
AsDB)
• Development of a
reliable monitoring
system for HD
outcomes
• Successful
implementation of
district based delivery
of education services
• Support to SACs
• Support to PRSP
(FY03-05)
• Support for district
delivery of
education and
health services
(FY03-05)
Health, Nutrition and Population
• Low public
spending and poor
value for money
because of
governance and
management
weaknesses
• Weak capacity in
the public sector for
policy formulation,
programming,
implementation,
and M&E
• Poor quality of
private health care
• Reduce mortality and
morbidity with a focus on
women and children
• Reduce fertility
• Country Outcomes in the
I-PRSP, to be achieved by
2003-04 include: to reduce
the IMR to 65/1000, to
reduce child mortality to
17/1000, to reduce the
TFR to 4.1 children per
woman, The I-PRSP also
sets targets in terms of
improved coverage of
water and sanitation,
• Improving governance
and the efficiency of
public expenditure
through devolution to
local governments and
other measure
• Increase in the % of births
attended by trained providers
to 25% by 2003-04
• Developing effective
district health systems
• Increase in the coverage of
prenatal care to 50% by 200304
• Focusing on basic care
especially
communicable disease
control, child care and
reproductive health
• Developing
partnerships with the
• Increase in the % of fully
immunized children to 85% by
2003-04
• Increase in the % of population
with access to LHWs to 90%
by 2003-04.
• Increase in the CPR to 39% by
2003-04
Ongoing
• Social Action
Program Project II,
Northern Health
Education Project,
AAA/policy
dialogue
Planned
• HIV/AIDS
Prevention Project;
National and
Provincial-level
multisectoral
adjustment
operations with
• HIV/AIDS Prevention
Project effective by
Q2 of FY03
• Lessons of SAPP II
adequately drawn in
the ICR
• HNP components in
adjustment
operations are
effective in
supporting major
reforms and
initiatives in line with
the government’s
strategies and sought
• ADB: Women’s Health
Project, Reproductive
Health Project, technical
assistance for health
sector reform in NWFP
• JICA: program to eradicate
neonatal tetanus.
• GAVI: assistance to the
immunization program
• WHO and other UN
agencies: various technical
assistance programs
• DFID and other bilateral
agencies provide support
Pakistan Country Assistance Strategy
Diagnostic
services and
consumer abuse
Strategic Objectives &
Country Outcome
Indicators
education, and
consumption poverty
• Important factors
outside the health
sector include
poverty, lack of
education
especially of
women,
environmental
factors, and many
households lacking
access to safe
water and sanitation
Annex V
Page 5 of 6
Strategies
partnerships with the
private sector both to
improve the efficiency
of government-financed
health expenditure and
to improve the quality of
private health care
services
• Improving the
regulatory framework.
• Creating mass
awareness in public
health matters
Country Performance
Indicators Against Strategy
Areas
• Increase in public expenditure
on health and nutrition as a
percentage of GDP
• Increase in the share of nonsalary expenditures in total
government health expenditure
• Increase in the share of
government subsidy in health
services accruing to the poor
[Note: a baseline has to be
established first]
WBG Instruments
health and
education
components; policy
dialogue; Public
Expenditure
Review (all
sectors)
WBG SelfEvaluation
Indicators
outcomes.
Major Related Activities
of Other Donors
for polio eradication
• EU: cofinancing of SAPPII
and free-standing technical
assistance program.
• Bridging nutrition gaps
in reproductive-age
women and young
children
• Promoting greater
gender equity
• Capacity building at the
Federal level and lower
levels
Pro-Poor Rural Infrastructure and Services and Social Protection
• Very poor rural
infrastructure and
social service
delivery systems
• High vulnerability of
rural poor to
idiosyncratic shocks
• Improved infrastructure
quality, efficiency, and
growth
• Policy dialogue
(Transport;
Urban/Water)
• Community driven
development of local
service provision
• AAA (Peshawar CDS;
District level needs and
capacity assessment
study)
• Implement Trade and
Transport Facilitation
program
• Support to
decentralization
strategy
1
• Rural asset base deepened
through rural community-based
infrastructure projects and
spread of micro-credit.
• Support to PRSP
• Sub-national
Adjustment
Programs (Sindh;
NWFP, FY03-05)
• AJK Community
Infrastructure
(FY03) 1
• Highways
Rehabilitation
Project (FY03)
• Strengthened
governance and
improved delivery of
basic infrastructure
services at the local
level
• Rural infrastructure, water
and sanitation, rural micro
credit
• Rehabilitated
highways, improved
NHA financial
management
• Support to Local
Gov. Services
(FY04-05)
Regarding reference to Azad Jammu Kashmir and the Northern areas, the staff of the Bank Group do not intend to make any judgement on the legal or other status of any disputed territories or to prejudice the final
determination of the parties' claims.
Pakistan Country Assistance Strategy
Diagnostic
Strategic Objectives &
Country Outcome
Indicators
Annex V
Page 6 of 6
Strategies
Country Performance
Indicators Against Strategy
Areas
WBG Instruments
WBG SelfEvaluation
Indicators
Major Related Activities
of Other Donors
Pro-Gender-Equity Policies
• Significant gender
gaps in both literary
and health status
• Institutional and
attitudinal
discrimination
against women
• National Resettlement
Plan Policy
• Indigenous peoples
policy gaps
• Changes in Laws to promote
gender equity
• National Gender Policy
• Dialogue on gender
• Resolution of outstanding
Resettlement cases
• Support to
decentralization
strategy
• Support to PRSP
thru Social Risk
Assessment
(FY03)
• Country Program
Risk Management
(FY03-05)
• Country Gender
Assessment (CGA,
FY04)
• National
Resettlement Plan
Policy
• National Gender
Policy
• Resolution of
outstanding
Resettlement cases
• DFID: Women’s Political
Participation and Gender
Sensitive Strategy, a
UNDP-Gender Equality
Umbrella Project; Family
Protection and Gender
Equality Project
• AsDB: Gender Reform TA
grant
Annex B1
Page 1 of 2
Pakistan Country Assistance Strategy
Pakistan at a glance
POVERTY and SOCIAL
2000
Population, mid-year (millions)
GNI per capita (Atlas method, US$)
GNI (Atlas method, US$ billions)
Pakistan
South
Asia
Lowincome
138.1
440
61.0
1,355
460
617
2,459
420
1,030
2.4
3.0
1.9
2.4
1.9
2.4
33
37
63
90
38
88
54
69
77
60
..
28
63
74
47
87
45
100
110
90
..
32
59
77
..
76
38
96
102
86
7/12/02
Development diamond*
Life
Average annual growth, 1994-00
Population (%)
Labor force (%)
Most recent estimate (latest year available, 1994-00)
Poverty (% of population below national poverty line)
Urban population (% of total population)
Life expectancy at birth (years)
Infant mortality (per 1,000 live births)
Child malnutrition (% of children under 5)
Access to an improved water source (% of population)
Illiteracy (% of population age 15+)
Gross primary enrollment (% of school-age population)
Male
Female
GNI
per
capita
Gross
primary
enrollment
Access to improved water
Pakistan
Low-income group
KEY ECONOMIC RATIOS and LONG-TERM TRENDS
1980
1990
1999
2000
GDP (US$ billions)
Gross domestic investment/GDP
Exports of goods and services/GDP
Gross domestic savings/GDP
Gross national savings/GDP
23.7
18.5
12.5
6.9
13.7
40.0
18.9
15.5
11.1
14.2
58.6
15.6
15.1
10.6
11.0
61.6
15.6
15.5
12.1
12.0
Current account balance/GDP
Interest payments/GDP
Total debt/GDP
Total debt service/exports
Present value of debt/GDP
Present value of debt/exports
-4.8
1.0
41.9
18.3
..
..
-4.7
1.3
51.6
23.3
..
..
-4.6
1.6
57.8
29.4
42.5
249.0
-3.6
1.4
52.2
26.7
..
..
1980-90
1990-00
1999
2000
2000-04
6.3
3.5
8.4
3.7
1.2
1.7
3.7
1.2
-2.9
4.4
1.9
16.0
4.4
1.9
0.5
Economic ratios*
Trade
Domestic
savings
Investment
Indebtedness
(average annual growth)
GDP
GDP per capita
Exports of goods and services
Pakistan
Low-income group
STRUCTURE of the ECONOMY
1980
1990
1999
2000
(% of GDP)
Agriculture
Industry
Manufacturing
Services
29.5
24.9
15.9
45.6
26.0
25.2
17.4
48.8
27.0
23.7
15.5
49.2
26.3
22.8
15.1
50.9
10
Private consumption
General government consumption
Imports of goods and services
83.1
10.0
24.1
73.8
15.1
23.4
79.0
10.4
20.0
76.9
11.0
19.1
-10
1980-90
1990-00
1999
2000
(average annual growth)
Agriculture
Industry
Manufacturing
Services
Private consumption
General government consumption
Gross domestic investment
Imports of goods and services
4.3
7.3
7.7
6.8
4.3
10.3
5.8
2.1
4.4
3.9
3.5
4.4
4.9
0.7
1.8
2.5
1.9
4.9
4.1
5.0
7.5
-6.9
-9.2
-5.4
6.1
-0.1
1.4
4.8
0.9
7.0
4.1
-2.3
Growth of investment and GDP (%)
5
0
-5
95
96
97
98
GDI
99
00
GDP
Growth of exports and imports (%)
20
10
0
-10
95
96
97
98
99
00
-20
Exports
Imports
* The diamonds show four key indicators in the country (in bold) compared with its income-group average. If data are missing, the diamond will
be incomplete.
Note: 2000 data are preliminary estimates. The debt figures in this table are from the WB debt reporting system and may differ from those in
Annex B7 because they cover calendar years rather than Pakistan's fiscal years (July 1 - June 30).
Annex B1
Page 2 of 2
Pakistan Country Assistance Strategy
Pakistan
PRICES and GOVERNMENT FINANCE
1980
Domestic prices
(% change)
Consumer prices
Implicit GDP deflator
Government finance
(% of GDP, includes current grants)
Current revenue
Current budget balance
Overall surplus/deficit
1990
1999
2000
Inflation (%)
15
..
9.1
..
6.5
5.7
5.9
3.6
3.7
10
5
0
..
..
..
18.0
-1.0
-6.6
16.2
-3.0
-6.0
16.6
-3.5
-6.3
1980
1990
1999
2000
2,365
..
..
1,371
..
..
..
..
4,927
443
239
2,489
7,411
1,066
1,163
1,788
7,528
2
533
6,993
9,613
1,496
1,477
2,921
8,191
73
540
7,579
9,602
896
2,793
2,705
..
..
..
102
..
..
87
87
100
84
93
91
1980
1990
1999
2000
2,958
5,709
-2,751
6,217
9,351
-3,134
8,842
11,737
-2,895
9,575
11,762
-2,187
-2
-281
1,895
-966
2,210
-1,808
2,005
-2,018
1,997
-4
Current account balance
-1,137
-1,890
-2,698
-2,208
Financing items (net)
Changes in net reserves
..
..
1,890
0
3,952
-1,254
2,000
208
..
9.9
1,311
21.4
2,228
50.1
1,606
51.7
1980
1990
1999
2000
9,931
330
821
20,663
1,816
2,106
33,886
3,315
3,905
32,182
3,093
3,828
95
96
97
98
99
GDP deflator
00
CPI
TRADE
(US$ millions)
Total exports (fob)
Cotton
Rice
Manufactures
Total imports (cif)
Food
Fuel and energy
Capital goods
Export price index (1995=100)
Import price index (1995=100)
Terms of trade (1995=100)
Export and import levels (US$ mill.)
15,000
10,000
5,000
0
94
95
96
97
98
Exports
99
00
Imports
BALANCE of PAYMENTS
(US$ millions)
Exports of goods and services
Imports of goods and services
Resource balance
Net income
Net current transfers
Memo:
Reserves including gold (US$ millions)
Conversion rate (DEC, local/US$)
Current account balance to GDP (%)
0
94
95
96
97
98
99
00
-6
-8
EXTERNAL DEBT and RESOURCE FLOWS
(US$ millions)
Total debt outstanding and disbursed
IBRD
IDA
Composition of 2000 debt (US$ mill.)
G: 1,519
A: 3,093
F: 3,954
Total debt service
IBRD
IDA
870
58
9
1,926
199
34
2,940
434
86
2,850
408
93
C: 1,529
Composition of net resource flows
Official grants
Official creditors
Private creditors
Foreign direct investment
Portfolio equity
268
544
167
68
0
538
913
-63
200
87
573
876
-477
472
28
926
452
-361
471
74
World Bank program
Commitments
Disbursements
Principal repayments
Net flows
Interest payments
Net transfers
185
90
29
61
39
22
972
494
92
402
141
261
808
628
283
345
237
108
0
301
291
10
210
-201
Development Economics
B: 3,828
E: 11,659
D: 6,600
A - IBRD
B - IDA
C - IMF
D - Other multilateral
E - Bilateral
F - Private
G - Short-term
7/12/02
Note: 2000 data are preliminary estimates. The debt figures in this table are from the WB debt reporting system and may differ from those in
Annex B7 because they cover calendar years rather than Pakistan's fiscal years (July 1 - June 30).
Annex B2
Page 1 of 1
Pakistan Country Assistance Strategy
Selected Indicators* of Bank Portfolio Performance and Management
As of 05/03/2002
Indicator
Portfolio Assessment
Number of Projects Under Implementation a
Average Implementation Period (years) b
Percent of Problem Projects by Number a, c
Percent of Problem Projects by Amount a, c
Percent of Projects at Risk by Number a, d
Percent of Projects at Risk by Amount a, d
Disbursement Ratio (%) e
Portfolio Management
1999
2000
2001
2002
23
4.3
13
33.8
13
33.8
18.2
16
4
18.8
19.6
18.8
19.6
22.1
16
3.9
6.3
20.6
6.3
20.6
30.9
16
4
18.8
41
25
60.5
44.3
CPPR during the year (yes/no)
Supervision Resources (total US$'000)
Average Supervision (US$'000/project)
Yes
3,507
106
Yes
3,384
123
No
2,041
93
Yes f
(est.) 1,306
(est.) 59
Memorandum Item
Proj Eval by OED by Number
Proj Eval by OED by Amt (US$ millions)
% of OED Projects Rated U or HU by Number
% of OED Projects Rated U or HU by Amt
a.
b.
c.
d.
e.
Since FY 80
Last Five FYs
121
29
8072.8
2894.7
24
24.1
31.3
28.9
As shown in the Annual Report on Portfolio Performance (except for current FY).
Average age of projects in the Bank's country portfolio.
Percent of projects rated U or HU on development objectives (DO) and/or implementation progress (IP).
As defined under the Portfolio Improvement Program.
Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the
beginning of the year: Investment projects only.
f. Includes quarterly and biannual portfolio reviews with federal and provincial governmnets.
* All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio,
which includes all active projects as well as projects which exited during the fiscal year.
Annex B3
Page 1 of 3
Pakistan Country Assistance Strategy
Pakistan - Proposed IBRD/IDA Base-Case Lending Program
(As of May 15, 2002)
Fiscal
Year
2002
Project Name
US$(M)
Strategic
Rewards
(H/M/L) a/
M
H
H
M
H
H
Implementation
Risks
(H/M/L) a/
H
M
M
L
H
H
Project
Drought Emergency Recovery Assessment c/
BSRPP
AJK Community Infrastructure Services Project
TA for Banking Sector
SAC II
Sindh SAC
Result
IDA
130
300
20
27
500
100
947
2003
Highways Rehabilitation
HIV/AIDS Prevention Project
National Education Assessment System LIL
Education Reform SAC
Tax Admin. Reform
Eco Reform TA
Result
100
20
5
150
100
25
400
M
H
H
H
H
H
M
H
H
M
H
H
2004
PIFRA II
Sindh On Farm Water Management
Local Government Support
SAC III
Result
100
50
50
200
400
H
L
H
H
H
M
H
H
2005
Local Government Support
Water Sector Management
SAC IV
Result
100
100
200
400
H
H
H
H
M
H
b/
b/
d/
Overall Result
2,147
a/ Indicates whether Strategic Rewards and Implementation Risks are expected to be High (H), Moderate (M), or Low (L).
b/ Operations already approved in FY02.
c/ $130 million of Drought Emergency Recovery Assessment is a reallocation of existing commitments under SAPP-II and NDP.
d/ Regarding reference to Azad Jammu Kashmir and the Northern areas, the staff of the Bank Group do not intend to make any
judgement on the legal or other status of any disputed territories or to prejudice the final determination of the parties' claims.
Annex B3
Page 2 of 3
Pakistan - Proposed IBRD/IDA High-Case Lending Program
(As of May 15, 2002)
Fiscal
Year
2002
Project Name
b/
b/
d/
Project
Drought Emergency Recovery Assessment c/
BSRPP
AJK Community Infrastructure Services Project
TA for Banking Sector
SAC II
Sindh SAC
Result
US$(M)
IBRD
IDA
130
300
20
27
500
100
947
Strategic
Rewards
(H/M/L) a/
M
H
H
M
H
H
Implementation
Risks
(H/M/L) a/
H
M
M
L
H
H
2003
NWFP PSAC
Highways Rehabilitation
HIV/AIDS Prevention Project
National Education Assessment System LIL
Education Reform SAC
Tax Admin. Reform
Provincial Adjustment Credits (Sindh, NWFP)
Eco Reform TA
Result
90
100
20
5
150
100
110
25
600
H
M
H
H
H
M
H
H
M
H
M
H
M
H
2004
PIFRA II
Sindh On Farm Water Management
Provincial Adjustment Credits II
SAC III
Local Government Support
Result
H
L
H
H
H
H
M
H
H
H
300
100
50
250
50
150
600
H
M
300
300
100
100
100
250
50
600
H
H
H
H
H
H
600
2,747
2005
Overall Result
Local Government Support
PIFRA III
Water Sector Management
Provincial Adjustment Credits III
SAC IV
Result
300
a/ Indicates whether Strategic Rewards and Implementation Risks are expected to be High (H), Moderate (M), or Low (L).
b/ Operations already approved in FY02.
c/ $130 million of Drought Emergency Recovery Assessment is a reallocation of existing commitments under SAPP-II and NDP.
d/ Regarding reference to Azad Jammu Kashmir and the Northern areas, the staff of the Bank Group do not intend to make any
judgement on the legal or other status of any disputed territories or to prejudice the final determination of the parties' claims.
Annex B3
Page 3 of 3
Pakistan Country Assistance Strategy
Pakistan - IFC and MIGA Program, FY 1999-2002
IFC approvals (US$m)
Sector (%)
FINANCE & INSURANCE
NONMETALLIC MINERAL
OIL, GAS AND MINING
TEXTILES, APPAREL & LE
Total
Investment instrument(%)
Loans
Equity
Quasi-Equity
Other
Total
MIGA guarantees (US$m)
1999
2000
2001
2002
83.00
55.10
52.10
24.04
60
40
0
100
100
77
23
100
100
77
100
0
100
100
23
100
100
147.11
147.54
96.76
80.5
Annex B4
Page 1 of 1
Pakistan Country Assistance Strategy
Pakistan - Summary of Nonlending Services
As of May 3, 2002
Product
Completion FY
Cost (US$000)
Audience a/
Objective b/
2001
2001
2001
2001
2001
2001
2001
2001
2001
2001
2001
2002
2002
2002
2002
190
87
12
110
120
43
181
90
219
333
115
206
43
188
92
B, G, P
B, G, P
B, G, P
B, G, P
B, G, P
B, G, P
B, G
B, G
B, G
B, G
B, G
B, G
B, G, P
B, G, P
B, G, P
K
K
K
K
K
K
K
K
K
K
K
K
K
K
K
2002
2002
2002
2002
124
122
582
150
B, G, P
B, G, P
B, G, P
B, G, P
K
K
K
K
2003
2003
2003
2003
2003
2003
2003
2003
2003
2003
2003
2003
2003
2003
100
100
100
100
100
100
150
150
100
150
130
100
100
100
B, G, P
B, G, P
B, G
B, G, P
B, G, P
B, G, P
B, G
B, G, P
B, G, P
B, G, P
B, G, P
B, G, P
B, G, P
B, G, P
K
K
K
K
K
K
K
K
K
K
K
K
K
K
Recent completions
Punjab Public Expenditure Review
Policy Note on SME
Note for Pakistan Dev. Forum
Financial Accountability Assessment
Oil and Gas Sector Policy Advice II
CAS Progress Report
TA for Energy Sector Dialogue & Policy Advice
TA for Provincial Health
TA for Immunization and HIV/AIDs
TA for Privatization
TA for Financial Setor Monitoring
TA for Subnational Economic Reform
Joint Staff Assessment - IPRSP
Development Policy Review
Private Sector Strategy
Underway
Environment Strategy
Transport Sector Strategy
Poverty Assessment
Country Assistance Strategy
Planned
Investment Climate
Provincial Economic Reform
Policy Note to New Government
JSA - PRSP
CFAA II
CPAR II
Oil & Gas Sector Review
Financial Sector Assessment
CAS Progress Report
Public Expenditure Review
Rural Development Policy Review
Power Sector Review
Sindh Rural Development Policy Review
Social Risk Assessment
a/ Government (G), Bank (B), public dissenmination (P)
b/ Knowledge generation (K)
Annex B5
Page 1 of 1
Pakistan Country Assistance Strategy
Pakistan Social Indicators
Latest single year
Same region/income group
1970-75
1980-85
1994-00
South
Asia
Lowincome
71.0
3.2
26.4
7.0
94.8
2.7
29.8
6.5
138.1
2.4
37.0
4.8
1,354.7
1.9
28.4
3.4
2,458.7
1.9
31.9
3.7
..
..
..
..
..
..
32.6
..
..
..
..
..
..
..
..
INCOME
GNI per capita (US$)
Consumer price index (1995=100)
Food price index (1995=100)
150
20
..
330
42
39
440
146
134
460
136
..
420
142
..
INCOME/CONSUMPTION DISTRIBUTION
Gini index
Lowest quintile (% of income or consumption)
Highest quintile (% of income or consumption)
..
8.0
41.8
..
..
..
31.2
9.5
41.1
..
..
..
..
..
..
..
2.2
0.3
..
2.9
0.9
0.9
2.7
..
0.9
3.1
..
1.2
3.3
..
..
..
..
..
..
..
69
77
60
100
110
90
96
102
86
..
..
..
38
77
22
88
96
84
87
92
85
76
88
70
..
..
..
38
77
22
81
80
38
63
75
47
64
70
..
52
52
52
57
57
58
63
62
64
63
62
63
59
58
60
134
183
122
161
90
126
74
99
77
116
339
381
..
..
283
291
..
..
186
153
340
..
223
212
..
49
288
258
..
..
POPULATION
Total population, mid-year (millions)
Growth rate (% annual average for period)
Urban population (% of population)
Total fertility rate (births per woman)
POVERTY
(% of population)
National headcount index
Urban headcount index
Rural headcount index
SOCIAL INDICATORS
Public expenditure
Health (% of GDP)
Education (% of GNI)
Social security and welfare (% of GDP)
Gross primary school enrollment rate
(% of age group)
Total
Male
Female
Access to an improved water source
(% of population)
Total
Urban
Rural
Immunization rate
(% under 12 months)
Measles
DPT
Child malnutrition (% under 5 years)
Life expectancy at birth
(years)
Total
Male
Female
Mortality
Infant (per thousand live births)
Under 5 (per thousand live births)
Adult (15-59)
Male (per 1,000 population)
Female (per 1,000 population)
Maternal (per 100,000 live births)
Births attended by skilled health staff (%)
CAS Annex B5. This table was produced from the CMU LDB system.
Note: 0 or 0.0 means zero or less than half the unit shown. Net enrollment ratios exceeding 100 indicate discrepancies
between the estimates of school-age population and reported enrollment data.
02/13/02