ADB and Government of Pakistan Sign Poverty Reduction Partnership by a93840ran


									                                                                                           NEWS FROM

 October 2002                      Volume 4, No. 2
                                                                         Newsletter of the Pakistan Resident Mission of the Asian Development Bank
News from Pakistan, a periodic Newsletter of the ADB
Pakistan Resident Mission, aims to enhance                        ADB and Government of Pakistan
communication between ADB and its client groups.
The newsletter disseminates relevant information on
ADB activities and provides a forum on development         Sign Poverty Reduction Partnership Agreement
issues in Pakistan. Articles in the newsletter,
however, do not necessarily reflect official ADB

1. ADB and Government of Pakistan Sign
   Poverty Reduction Partnership Agreement
2. Vice President Shin’s Visit to Pakistan.
                                                       A           D B a n d t h e
                                                                  G o ve r n m e n t o f
                                                                  Pakistan signed a
                                                       Poverty Reduction Partnership
                                                       Agreement on 16 September,
3. PRM Report on Poverty in Pakistan Issues,           2002. The Secretary Economic
   Causes and Institutional Responses.
4. Presentations.
                                                       Affairs Division signed the
5. Punjab Community Water Supply and                   Agreement on behalf of the
   Sanitation Project.                                 Government of Pakistan, while
6. Quarterly Consultative Meeting with NGOs.           Country Director, Pakistan
7. Operational Programs.
8. News and Events.
                                                       Resident Mission (CD PRM)
9. New Arrivals.                                       s i g n e d f o r A D B. T h e
                                                       Agreement was signed in the            Vice President Shin and the Finance Minister, Mr. Shaukat Aziz
                                                                                                      shake hands after signing of the Agreement
                                                       presence of the Minister for
                                                       Finance, Mr. Shaukat Aziz and ADB's Vice-President, Mr. Myoung-Ho Shin.
                                                       Addressing a press conference after the signing of the Agreement, the Vice-President
                                                       explained its main features and reiterated ADB's support for the Government's reform
                                                       agenda. The Minister for Finance, in his remarks, expressed the gratitude of the
                                                       Government for ADB's generous support to Pakistan over the years, and noted that
                                                       ADB was the first multilateral institution to repose confidence in the reform measures
                                                       being undertaken.

                                                       The Partnership Agreement sets out a shared vision for reducing poverty in Pakistan,
                                                       and key priorities for joint development cooperation between the Government and ADB
                                                       to realize this vision. As the Agreement states, the Government and ADB agree that
                                                       medium-term strategic goals to achieve the long-term vision for poverty reduction
                                                       require a sharper focus on (i) improving good governance including people's participa-
                                                       tion and involvement in public, corporate and financial sectors; (ii) generation of
                                                       productive employment opportunities, and provision of suitable physical infrastructure
                                                       for faster economic growth; and (iii) increasing allocations for social sectors, and
                                                       improving delivery of basic social services to enhance human development.

                                                            In the medium term, ADB intends to assist the Government of Pakistan to
                                                       "    Establish the legal and policy basis for governance reforms;
                                                       "    Support the decentralization of the financing, planning and delivery of health and
Overseas Pakistanis Foundation (OPF) Building
                                                            population welfare services;
Shahrah-e-Jumhuriyat, G-5/2 Islamabad.
Tel. +92 51 2825011-16
                                                       "    Support primary education, particularly for girls;
Fax. +92 51 2823324, 2274718
                                                       "    Ensure inclusion of the poor in public social services through development of rural
                                                            water supply systems, and upgrading of basic urban services;
                                                       "    Increase agricultural productivity and diversification through a move to market-
                                                            based agricultural prices, strengthening of research and extension services, and
Country Director:
M. Ali Shah
                                                            expanding the role of the private sector in storage and agriculture support services;
"   Restructure the power and gas sectors, develop indigenous
    energy sources and renewables and support the development
    of regional energy sector infrastructure;
"   Implement judicial, administrative and police reforms to
    support improved access to justice.
"   Develop rural roads and provincial highways, as well as road
    and rail links with Afghanistan and Central Asia to strengthen
    regional cooperation; and
"   Provide microfinance for the poor, promote SMEs, develop
    the capital market, restructure and privatize selected state
    owned financial institutions, and promote environmentally
    sound industrial and energy efficient industrial development.

The signing of the Poverty Reduction Partnership Agreement has
set the stage for the Government and ADB to further expand the
scope of their partnership to realize the goal of halving the              Vice President Shin, Finance Mininster Mr. Shaukat Aziz,
incidence of poverty in Pakistan by 2011. ADB, together with the     CD PRM Mr. M. Ali Shah and Secretary EAD, Dr. Waqar Masood Khan,
                                                                         addressing a press conference after the signing ceremony.
Government, will review progress on targets specified under the
Agreement annually, during the Country Programming Mission.


V       ice President Myoung-Ho Shin completed a
        highly successful and well publicized five-day
        visit to Pakistan from 13-18 September. The
highlight of the Vice President's visit was the signing of
the Poverty Reduction Partnership Agreement. In
addition, Mr. Shin met with a number of high-ranking
Government officials during his visit, and held talks on
ADB's program in Pakistan. The first of the series of
meetings was chaired by Mr. Razzak Dawood, Minister of
Commerce, and facilitated by Mr. Mueen Afzal,
Secretary General, Ministry of Finance. The meeting
was also attended by, among others, the Secretaries for
Finance, Planning and Development, Petroleum and
Natural Resources, Water and Power, and Economic
                                                                Vice President Shin meeting the Finance Minister, Mr. Shaukat Aziz
Affairs. In addition, the Chairman of the Agricultural

                                                        Development Bank of Pakistan (ADBP), the Managing Director of
                                                        Karachi Electric Supply Corporation (KESC), representatives of the
                                                        Securities and Exchange Commission of Pakistan (SECP) and the
                                                        Privatization Commission, and the Economic Adviser, Ministry of
                                                        Finance, also attended the meeting. This was a comprehensive
                                                        meeting lasting over three hours, in which the various officials
                                                        (through separate presentations) elaborated on the Government's
                                                        overall economic reform agenda and reforms being carried out in the
                                                        various sectors.

                                                        The Vice President also undertook a series of field visits to review
        Vice President Shin presenting a cheque to a
                beneficiary of Khushali Bank.
                                                        ADB projects, including a visit to the ADB-financed Khushali Bank
which provides microfinance services to the poor; a
visit to an under-construction overhead bridge in the
Lai Nullah area in Rawalpindi, that had been badly hit
by floods in July last year and a field visit to a farm to
market road in the Kasur area (approximately 60 km.
from Lahore) built under the ADB-assisted Rural
Access Roads Project.

In Lahore, the Vice President paid a courtesy call on the
Governor Punjab, and also met with senior officials of
the Government of Punjab, who had organized a
presentation on Punjab's development vision for the
future and the various initiatives already underway to
realize this vision. The Vice President appreciated
                                                                      Vice President Shin meeting officials of the Federal Government.

                                                                 Punjab's development vision and noted that this was very much
                                                                 consistent with ADB's own strategy for sustainable development
                                                                 and poverty reduction in the Developing Member countries
                                                                 (DMCs). The Government of Punjab mentioned the develop-
                                                                 ment of water resources as a key priority area for Punjab and
                                                                 requested ADB's support and assistance in this sector.

                                                                 Overall, the Vice President's visit to Pakistan proved extremely
                                                                 useful in continuing high-level consultations with the
                                                                 Government on Pakistan's development program and reform
                Vice President Shin with PRM staff.

PRM Publishes Report on Poverty in Pakistan
 Issues, Causes and Institutional Responses

P       RM launched the poverty assessment for Pakistan,
        entitled "Poverty in Pakistan: Issues, Causes and
        Institutional Responses" in a media briefing on 12
August. The report provides an overview of the poverty
situation prevailing in Pakistan, and analyzes the poverty
impact of various policies and programs undertaken to
reduce poverty. Its preparation started in November 2000,
and a draft report was discussed at a High Level Forum with
representatives of the Government, private sector, civil
society, and international funding agencies, in April 2001. It
was the prime input in the preparation of the ADB's
Country Strategy and Program (CSP) for the period 2002 to
                                                                                     Farm to market road in Kasur built under
2006, which was approved in May 2002.                                                   ADB’s Rural Access Roads Project.

The assessment shows that the declining trend in poverty in                26.6 percent in 1993 to 32.2 percent in 1999 and the
Pakistan during the 1970s and 1980s was reversed in the                    number of poor increased by over 12 million people
1990s. The incidence of poverty is estimated to have                       during this period. Since 1999, economic growth has
increased significantly after 1997, coinciding with the onset              slowed further, development spending has continued
of a period of slow growth in the country It increased from
                                         .                                 to decline, and the country has experienced a severe
                                                              "   Gender discrimination is another key attribute that
                                                                  characterizes the poor. Incidence of poverty among
                                                                  women in Pakistan is higher compared with men,
                                                                  and is characterized by low endowment of land and
                                                                  Productive assets, unemployment, discrimination in
                                                                  the labor market, and        limited access to
                                                                  economic options and political processes.
                                                              "   The poor are also characterized by their vulnerabil-
                                                                  ity to environmental degradation and deteriora-
                                                                  tion of the natural resource base, given that they
                                                                  tend to be strongly dependent on the exploitation of
                                                                  such resources.

                                                              The assessment states that poor governance is the key
                                                              underlying cause of poverty in Pakistan, which has not
drought. It is therefore estimated that the incidence of      only enhanced vulnerability, but is the prime cause of
poverty in Pakistan today is higher than in 1999. While the   low business confidence, which in turn translates into
increase in income poverty and material deprivation is a      lower investment levels and growth. With regard to
cause for concern, what is more disquieting is that the       economic factors, decline in GDP growth is the immedi-
capacity of the poor in Pakistan to access public             ate cause of the increase in poverty over the last decade.
entitlements like political processes or goods and services   For the longer term, Pakistan's growth potential is being
which determine human development contrasts strikingly        seriously undermined by its poor social indicators. If
with that of the rich, and this difference appears to be      human resources are not developed, as is the case in
increasing over time.                                         Pakistan, the economy tends to be mired in a low value
                                                              production mode.
As the assessment outlines, there are a number of attrib-
utes, besides location, which characterize the poor in        The assessment also details responses to poverty, and
Pakistan, including the following.                            notes that a number of programs aimed at helping the
                                                              poor are being implemented by the Government, and
"   Education is the most important factor that distin-       also by Non Government Organizations (NGOs) and the
    guishes the poor from the non-poor, for example the       private sector.
    proportion of literate household heads in poor house-
    holds was almost half that in non-poor households.        The assessment was widely disseminated and was very
"   Second, poor households on average had 75 percent         well received by Government officials, civil society
                                                              institutions and the media. It was also extensively
    more children that the non-poor households. Most of
    these children are not receiving any education, and       commented upon and covered in the national press.
    thus the cycle of poverty is perpetuated.
"   Third, more than one third of the poor households
    were headed by aged persons who were dependent on
    transfer incomes, such as pensions and other forms of
    social support.
"   Fourth, the poor had few physical assets, and accord-
    ing to one study, if a rural household possesses
    physical assets (land/livestock) the probability of it
    being poor declines by 55 percent.
"   Fifth, the poor rely disproportionately on informal
    sector employment. The incidence of poverty is the
    highest among household heads with occupations such
    as day laboring in agriculture, construction, trade and
    transport sectors. Incidence of poverty is also high
    among self-employed, which includes street vendors
    in urban areas, and sharecroppers in rural areas.
T        he CD PRM made two presenta-
         tions in key institutions in the last
         few months. The first of these was a
presentation at the Conference on Sindh
Business and Industry in Karachi on
                                                         and local governments. This has the potential of greatly enhancing the
                                                         development impact of ADB assistance and further streamlining portfolio
                                                         management. The CD also talked about the history of ADB's association
                                                         with the Government of Sindh and highlighted key features of important
                                                         projects undertaken in Sindh.
October 1, 2002. The presentation was
titled "Social Development in Sindh A                    On 3 October 2002, the CD made a presentation at the National Institute
Development Partner's View." The                         of Public Affairs (NIPA) at Lahore, on "The Growth of Poverty in Pakistan
presentation focused on the nature and                   Issues and Causes." The CD presented the main findings of ADB's recent
extent of poverty in Sindh, with particular              poverty assessment for Pakistan, which was published and widely
emphasis on how the low level of human                   disseminated in August 2002 (see Section above). The CD emphasized
development in the province is acting as an              that ADB endorses the Government's poverty reduction strategy and
impediment to future growth. However, the                ADB's development strategy for Pakistan complements the Government's
CD also lauded the Government of Sindh                   efforts. Over the last decade, the ADB's development policy in Pakistan
for its initiation of a comprehensive reform             has undergone some changes in response to the country's development
program for the province which encom-                    needs, shifting from an emphasis on infrastructure projects to a more
passes fiscal restructuring, improving                   defined focus on poverty reduction, human development and improved
public service delivery, and regulatory                  governance. He also said that PRM is actively engaged in dialogue with
reforms. The CD also affirmed that while                 the Government, both at the Federal and Provincial levels, with regard to
in the past ADB assistance to Pakistan was               the reform agenda and improving project implementation and aid absorp-
coursed through the federal Government                   tion to ensure that the objectives of ADB's assistance are realized for the
and it's associated departments and                      betterment of Pakistan.
agencies, now, with the Government's
adoption of the 2000 Local Government                    The third important presentation from PRM was by the Senior Investment
Plan, whereby powers are being devolved                  Officer, who spoke in a seminar organized by Communication and Works
to the provincial and local governments, a               Department, Government of Punjab on "Role of Multilateral Agencies in
window of opportunity has opened to                      Infrastructure Financing." The presentation highlighted ADB's role in
provide assistance directly to provincial                financing private sector operations, and explained how ADB private
                                                                                            sector operations focus primarily on
                                                                                            the financial sector and infrastructure.
                                                                                            For infrastructure projects, ADB
                                                                                            assists in analyzing the feasibility
                                                                                            studies and developing the structure
                                                                                            and provides financial support to
                                                                                            qualified project through equity
                                                                                            investments, loans, and credit
                                                                                            enhancement products including
                                                                                            guarantees. In summary, ADB's role
                                                                                            in financing infrastructure projects, is
                                                                                            primarily to catalyze and mobilize
                                                                                            resources into private sector projects
                                                                                            which deliver development impact,
                                                                                            and to "add-value" to private sector
                                                                                            projects to sustain development

                                                                                            The presentations were all widely
                                                                                            publicized and well received, and have
                                                                                            served to highlight ADB's operations
                                                                                            in Pakistan amongst a cross section of
                  Senior investment officer, PRM addressing a seminar in Lahore.

F      ollowing successful completion of commu-
       nity-based Punjab Rural Water Supply and
       Sanitation Project (PRWSS) in seven brackish
and barani districts of Punjab, the Government of
Punjab, with the assistance of ADB, has prepared the
second phase of the Project to replicate the model in
the remaining districts of Punjab where water is
scarce and/or brackish. This is being developed in
close collaboration with the participating Tehsil
Municipal Administrations (TMAs), Union Councils
and NGOs.

The Project Preparatory Technical Assistance
(PPTA), which was completed in August 2002,
focused on building on the design, community
participation and ownership, and sustainability
                                                             Project implementation officer (Water and Sanitation ) PRM,
of technical and financial operations under the                         addressing the consultative workshop
PRWSS. The PPTA has identified needs and
constraints for building the institutional capacity
of the newly established local Government               project design, a province-wide conference of the newly
institutions, and provided guidelines for system-       formed TMAs was organized at the inception of the PPTA
atic improvement in various functions of TMAs,          and a consultative workshop of senior professionals of
together with improving health and hygiene,             various partner agencies took place at the mid-term. A key
children's education, and livelihood of women           stakeholders dialogue was held on 24 July 2002 to dissem-
linked with the provision of water supply and           inate the findings and recommendations of the draft
sanitation facilities. T ensure adequate partici-
                        o                               report. Processing of the project loan is expected to be
pation of the stakeholders in preparing the             completed by the end of current year.

                  WITH NGOs

P      RM's quarterly meetings with NGOs contin-
       ued, with the most recent consultative meeting
       being held on 26 July. Fifty major local and
international NGOs were invited to the meeting and
asked to suggest agenda items for discussion. The
                                                        initiative, expressed concern on the administration of some
                                                        projects which involve resettlement issues, and emphasized
                                                        that ADB needs to ensure that the project affectees are compen-
                                                        sated as per agreements. Some participants stressed the need to
                                                        involve NGOs at the policy dialogue level where the basic
meeting was attended by representatives of key NGOs.    elements of the donors development model are discussed.
During the meeting the CD suggested ways of increas-
ing NGO participation in the formulation of ADB's       ADB Technical Assistance, TA 3618-Pak, Institutional
programs by holding consultations with NGOs during      Strengthening for Government NGO Cooperation also came
the CSP preparation process as well as during Country   under discussion. A participant explained that the TA was
Program Confirmation Missions. The NGO represen-        discussed at the Pakistan NGO forum and viewed to be not
tatives, while appreciating PRM's consultation          favorable to NGOs in general because of its support for the
Proposed new law for NGOs. T clarify, the CD
explained that the TA was not involved in preparation
of the proposed law, and it is focused on two main
areas: 1) creation of a more positive and effective
environment for Government NGO cooperation in
development, 2) addressing the identified need for
institutional development and capacity building of both
the Government and NGOs. As such it will help in
building favorable working environment for NGOs and
the Government. The TA will provide valuable lessons
and opportunities for NGO - Government cooperation
that will be upscaled through the technical assistance
and loan financing available under the Access to Justice
Program and the Decentralization Support Program.

The meeting agreed to hold regular consultation
                                                             NGO representatives and PRM staff at the quarterly consultative meeting
meetings on a quarterly basis.

                     OPERATIONAL PROGRAMS

A       DB's 2002 operational program for Pakistan                   Since July 2002, substantial progress has been achieved
        amounts to approximately $1 billion, and includes            in the processing of the program, which had earlier been
        key projects such as the $270 million Devolution             adversely affected by the security situation in the
Support Program, the $260 million Financial (Non Bank)               country and the region. Contract negotiations for the
Markets and Governance Program, the $250 million Rural               $600,000 Gender Reform Program were held in July
Finance project, and the $50 million Sindh Rural                     2002, and loan negotiations for the Devolution Support
Development Program. In addition, 16 TAs are being                   Program, Sindh Rural Development, and Punjab Road
processed this year, including the $450,000 Agribusiness             Program were held in September 2002. For most other
Development study the $650,000 Strengthening Portfolio
                   ,                                                 loans and TAs, processing is in the advanced stages, with
Performance TA and the $150,000 TA on Debt Management                loan negotiations and approval by ADB's Board of
Strengthening of EAD.                                                Directors scheduled for November/December 2002.

                                NEWS AND EVENTS

T       he Memorandum of Understanding (MOU) between
        ADB and the Government for the 2002 Country
        Portfolio Review Mission (CPRM) was signed on 2
September. The CPRM had been conducted in May 2002, and
had involved discussions between PRM and officials of the
                                                                     delays in loan closing. The MOU details steps to be
                                                                     taken by PRM and the Government to overcome these
                                                                     problems, including capacity building in both PRM and
                                                                     the Government and the institution of better monitoring
                                                                     and evaluation practices.
Federal and Provincial Governments. The main project
implementation issues identified included start up delays,           As a part of its continuing portfolio management
which occur mainly due to delays in the establishment of             improvement efforts, PRM conducted Project
Project Management Units, constraints during implementa-             Performance Review Meetings (PPRMs) in Sindh on
tion including those arising from frequent changes in PMU            16 August 2002, Balochistan on 21 August 2002 and
staff and lack of transparency in use of imprest accounts, and       NWFP on 28 August 2002. The PPRM for Punjab was
conducted on 25 September. The PPRMs were chaired               Water Resources Strategy Study, that is being carried out
by the provincial Finance Ministers and the participants        under a TA being implemented by the Ministry of Water and
included senior level participants from the concerned           Power. A draft Water Sector Profile had earlier been submitted
line departments. Major issues that needed urgent               in November 2001, which was discussed at a first National
attention, and that were raised with the respective             Workshop held in Islamabad in February 2002. The day long
provincial governments and executing agencies,                  Final National Workshop was attended by over 50 participants
included outstanding audit issues, problems in timely           from the Government and civil society groups, who actively
closure of loan accounts after loan closing dates, and          participated in discussions on the report, and made recommen-
implementation delays in certain projects. Agreements           dations for its finalization. The final outputs of the TA will
were reached on time-bound action plans for resolution          consist of a National Water Sector Strategy and a Medium Term
of these issues.                                                Investment Plan. These documents will be critical in providing
                                                                the necessary road map for the development of the national
As part of PRM's annual activity of capacity building of        water sector and for future investments in this sector.
its EAs, two-day Portfolio Management Workshops
were held in September and October 2002 in Karachi,             PRM published the second issue of the Pakistan Economic
Quetta and Peshawar. Another workshop was held in               Update, covering the period from July 2001 to June 2002 in
Lahore on 21-22 October, and the last workshop of the           August. The report has been widely disseminated to policy
series will be held in Islamabad on 10-11 December              makers, academic and civil society institutions and the media.
2002. The workshops all followed a similar pattern with
the first day being devoted to issues relating to portfolio     Pakistan featured prominently on ADB's website from 6 to 13
performance, and discussions on ways to improve the             September, with a web feature entitled "Spotlight on Pakistan."
portfolio performance in Pakistan. In addition, ADB's           The poverty assessment was highlighted on ADB's homepage,
Project Cycle and ADB guidelines for Use and                    along with an article on empowerment of women in Pakistan,
Selection of Consultants and for Procurement were               and a link to PRM's webpage.
discussed. On the second day, ADB's disbursement
policies and procedures, and the new Financial
Management Guidelines including issues relating to
audit were presented for discussion. Workshop partici-
pants include Project Directors/Managers and con-
cerned staff of EAs which are implementing ADB
projects in the respective provinces, staff from the
Planning and Development Departments, Finance and
various line departments/ministries, and staff from the
Auditor General's office. ADB's counterparts in the
Government have found these workshops to be
extremely useful and they have suggested that such
capacity building activities should be undertaken
regularly by PRM.                                             POVERTY IN PAKISTAN

A Final National Workshop was held on 13 September                                  COUNTRY STRATEGY
                                                                                     AND PROGRAM
in Islamabad to discuss the draft final report for the
                                                                                                         ECONOMIC UPDATE

                                         NEW ARRIVALS

P     RM's Governance Unit became fully opera-                  Interim Administration Mission in Kosovo just prior to joining
      tional in August 2002, with the re-location of            PRM. Other new arrivals include Ayesha Salman and Shahnaz
      Douglas J. Porter to Islamabad, and the appoint-          Shaheen, both of whom have joined PRM as Administrative
ment of Raza Ahmad as Project Specialist, Governance.           Assistants. While Ayesha's most recent appointment was with
Mr. Porter was previously working at ADB                        the ILO, Shahnaz was previously working at Cosmos Stars
Headquarters as Governance Specialist in the South              Ltd., a multinational firm.
Asia Division, while Raza finished a stint with the UN

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