Pakistan Update
July 2005 by World Bank
Pakistan has made significant development progress since its independence 58
years ago, as measured by some key social indicators. Health and education
services have expanded and improved, and life expectancy has increased from
59 years in 1990 to 64 for males and 66 for females in 2003. Infant and
maternal mortality rates have dropped, as have illiteracy rates.
During the 1990's Pakistan made only modest progress in reducing poverty and
improving the welfare of its people. Growth of real gross domestic product
(GDP) slowed to less than 4 percent and per capita real income grew by only
slightly more than 1 percent per year, leading to an increase in poverty to
32 percent. Social indicators stagnated. For example, the net primary
enrollment rate declined from 46 percent in 1991/92 to 42 percent in
2001/02, with male enrollments declining from 53 percent to 46 percent, and
female from 39 percent to 38 percent. By the late-1990s, Pakistan was in a
position of extreme vulnerability with high and unsustainable fiscal
deficits and heavy debt burden, which squeezed public investment and social
spending.
Beginning in 2000, the government initiated a wide-ranging and ambitious
reform program, which has resulted in a dramatic turnaround. Pakistan has
turned around a deteriorating macroeconomic situation to a rapidly improving
one. In 2004/05, GDP grew by over 8 percent. These macroeconomic
achievements have allowed the country to achieve fiscal consolidation. Both
external and internal balances have strengthened and reserves now cover five
months of imports. Public debt has fallen to 60 percent of GDP from almost
90 percent in 2000/01. Social and poverty-related expenditures have been
raised from 3.8 percent of GDP in 2001/02 to 4.7 percent of GDP in 2003/04.
The government has also launched far-reaching structural reforms to
privatize public sector enterprises, strengthen public and corporate
governance, liberalize external trade, and reform the banking sector.
There are now indications that these reforms have begun to pay off in the
form of improved development outcomes. Based on the recently released
Pakistan Social and Living Standards Measurement Survey (PSLSMS), literacy
rates of population 10 years and older have increased to 53 percent as
compared to 45 percent in 2001/02. While both female and male literacy, at
40 percent and 65 percent respectively have increased, the gender gap has
not shown any significant reduction. However, despite these favorable
developments, formidable challenges remain. Pakistan's social indicators
still lag behind countries with comparable per capita incomes.
DEVELOPMENT CHALLENGES
Poverty remains a serious concern in Pakistan. According to the rebased GDP
numbers, the per capita income comes to US$720; poverty rates, which had
fallen substantially in the 1980s and early 1990s, started to rise again
towards the end of the decade. Though complete data from the recent
Integrated Household Survey is not yet available, it is evident that a large
segment of the population lives in poverty. More importantly, differences in
income per capita across regions have persisted or widened. Poverty varies
significantly among rural and urban areas and from province to province,
from a low of 24 percent in urban Sindh to 51 percent in rural Sindh.
Pakistan has grown much more than other low-income countries, but has failed
to achieve social progress commensurate with its economic growth. The
educated and well-off urban population lives not so differently from their
counterparts in other countries of similar income range. However, the poor
and rural inhabitants of Pakistan are being left behind. For example, access
to sanitation in Pakistan is 23 percent lower than in other countries with
similar income.
Maternal mortality remains high at 450 per 100,000 live births. Gender gaps
remain in schooling, largely due to the rural areas where only 22 percent of
girls above age 10 have completed primary level or higher schooling as
compared to 47 percent boys. While the PSLSMS indicates an improvement in
Net Enrolment Rate (NER), from 42% in 2001/02 to 52 per cent, it still
indicates that almost half of the primary school age cohort is currently out
of school. While the NER shows an insignificant gender gap in urban areas,
NER for rural girls at 42 percent trails behind rural boys' NER of 53
percent.
Meeting the vision embraced in the Millennium Development Goals by 2015
(including the reduction of infant and child mortality by two thirds and
maternal mortality by three quarters and halving the percentage of the
population living in poverty) will require renewed efforts in Pakistan. The
World Bank's assistance strategy is based on measurable outcomes using the
MDGs as the background for its engagement in Pakistan.
WORLD BANK ASSISTANCE TO PAKISTAN
The World Bank's strategy is to support implementation of the Government of
Pakistan's own Poverty Reduction Strategy Paper (PRSP) and to provide
financing and technical assistance for both economic and human development.
The strategy is built around three main themes which correspond to the
pillars of the PRSP.
SUSTAINING HIGH AND BROAD BASED GROWTH, AND IMPROVING COMPETITIVENESS
Pakistan's PRSP emphasizes the importance of sustaining rapid and
broad-based economic growth as the principle means of reducing poverty.
While significant progress has been made in reducing state intervention in
the economy and improving the regulatory framework for private business,
firms continue to face significant policy, regulatory, and infrastructure
constraints. To help address these constraints and create an environment
conducive to healthy private sector growth, the Bank program will support
legal and regulatory reforms to improve the business environment along with
investments in water, power, transport, and other infrastructure sectors.
IMPROVING GOVERNANCE
Improving government performance is a central element of Pakistan's poverty
reduction strategy. The Bank is assisting the government's efforts in this
area by supporting reforms in public financial management and procurement;
restructuring of the tax administration bureaucracy; support for civil
service reforms; and assistance to local and municipal governments to
improve their capacity for delivering public services.
IMPROVING LIVES AND PROTECTING THE VULNERABLE
The World Bank also supports Pakistan's efforts to improve the lives of its
citizens through efforts to improve access to, and quality of, public
services in education, health, electricity, water supply, and sanitation,
with an emphasis on addressing gender disparities. At the same time the Bank
is assisting in efforts to reduce vulnerability and poverty through
effective safety nets and targeted programs to reach the poor.
The Bank will continue to support implementation of targeted activities in
poor communities, especially in rural and drought-prone areas. The Bank will
seek to build on the successful experience of the Pakistan Poverty
Alleviation Fund (PPAF) which has reached 6,500 communities through micro
credit and community-driven physical infrastructure projects, and ongoing
Community Infrastructure Projects in AJK and NWFP.
CURRENT LENDING
Pakistan joined the World Bank in July of 1950. Since 1952, the World Bank
has approved 266 loans and credits for Pakistan (100 loans and 166 credits),
totaling more than US$15.7 billion, of which about US$9 billion remains
outstanding. The FY06 ongoing portfolio consists of 17 projects under
implementation with a net commitment of US$1.1 billion.
Box 1: WEAVING SUCCESS
Endless plains of sand and dry bushes - the heat and arid conditions of the
desert make it virtually impossible for one to imagine that life could exist
here. Yet scattered all over Tharparkar desert are small communities. Inside
these communities is a world very different from ours, yet extremely rich
and colorful in tradition and culture. Ram Jee ji Veri is one such
community.
Until a few years ago, there was an increasing trend among the villagers to
migrate out of the village in search of greener pastures. There was no water
for miles around, and life was difficult for families living in Ram Jee ji
Veri. However with support from the Pakistan Poverty Alleviation Fund
(PPAF), the water supply scheme was constructed. This was the first time
most villagers had seen running water, and it was thought of as no less than
a miracle.
Once the village established its own water supply, migration ceased. In
communities such as Ram Jee ji Veri, an issue close on the heels of water
shortage is lack of employment. Parago, like most men in the village, grew
desert friendly grain and seed crops that are easily cultivated in extreme
conditions of the desert. Some of the produce is reserved for family use and
the rest is sold in nearby cities when prices for these crops are higher.
The desert is a difficult place to farm, and the weather is conducive for
farming only four months each year. The crops Parago was able to farm and
the money he earned was never enough to feed his family. With eight
children, himself, and his wife to feed and support, Parago, like so many
Thari people, was forced to take out loans from local lenders whose
impossibly high interest rates can only be described as usuary.
When the PPAF water supply project was underway, Parago came to know about
the micro credit program that PPAF had initiated with Thardeep Rural
Development Program (TRDP), PPAF's partner organization in the region.
Parago's father was an artisan whose speciality was weaving Thari shawls at
a handloom in his home. Though Parago and his brothers were all taught the
skill at a young age, none of them actually fell back on it as a source of
income, preferring to farm instead. A camel bit off Parago's elder brother's
right hand a few years ago, and he could not farm anymore. With only limited
use of his right hand, Parago's brother started earning his livelihood
weaving these shawls at a loom in his own house.
He was provided materials by an intermediary who sold these shawls to bulk
buyers. Parago's brother was paid a very small amount as compensation for
his labour.
Parago decided to invest in his brothers trade and took a credit of Rs.
5000/- with which he bought materials for shawls. He gave the materials to
his brother who weaved them into shawls. Parago took these shawls to
Nawabshah, a large city compared to the hamelts in Thar. In Nawabshah, his
shawls were a great success. Parago started making a handsome profit and
that was a turning point for the Parago family.
Parago has three daughters and five sons. His three elder children help to
supplement the household income by weaving carpets for an intermediary who
caters to bulk buyers. It takes nearly 2 months for them to complete one
carpet. The hand woven carpets sell for at least Rs.250/- per foot and the
average carpet is around 54 square feet. The children are paid, Rs 4000 per
carpet.
Parago has successfully completed three loan cycles with the PPAF/TRDP micro
credit program, taking loans of Rs 5000/-, 12000/- and 15000/- Having done
that, Parago realizes the potential of his trade. He says that if possible
he would like to take credit of Rs. 50,000/- payable in installments over
five years. He wants to invest this money in materials for carpets and
shawls. He wants to buy his own carpet loom so his children can work
directly for him and not for the intermediary. He knows that if he can
manage that his whole family will be self employed and the money made from
their handicraft will be theirs and they will be more prosperous.
Now, Parago's household income is enough to allow him to send his children
to school. The elder children could not go to school at the right age
because of financial constraints, but now the younger children are going to
school. "I wish I had been able to send my older children to school" says
Parago, "but constraints make one helpless. It isn't easy to educate
children when it means they will have to leave work"
Recently Parago paid back Rs. 20,000/- to the local lenders, went to local
village fair with his shawls and in 17 days, he managed to earn a profit of
Rs.13000/- However, he still has to pay Rs.70,000/- to the professional
lenders.
Parago understands the importance of saving and while he regularly makes
payments to the lenders and runs his household more comfortably, he makes it
a point to save at least Rs.1000/- every month. Parago's financial condition
has improved, yet he and his family maintain a simple lifestyle. He has not
bought a radio or television and he explains that.,"The way we live is the
way our whole community lives. This is our way of life. All that we require
is that life is peaceful and without worries about being indebted to lenders
who charge usuary rates, that we have food in our bellies and clothes to
wear. A simple life with better future for our children is all we want."
N A D E E M M A L I K
Flat#8, Block 2-A, St#1, I-8/1
ISLAMABAD, PAKISTAN.
00-92-51-4434300
00-92-333-5117511
PakistanNews@hotmail.com
