Pakistans IPRSP in the Light of Evaluative Experience of the World Banks Poverty Reduction Strategy

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Pakistans I-PRSP in the Light of Evaluative
Experience of the World Banks Poverty Reduction
Strategy and the Global Experience with the PRSPs
so far

• Sohail Jehangir Malik
• Chairman
• Innovative Development Strategies (Pvt.) Ltd

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Global Poverty Reduction during the 1990s

• The World Banks three pronged poverty reduction
  strategy of 1990
• Growth
• social sector development
• and safety nets
• had mixed results
• In terms of the money-metric measure of poverty

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By the end of the 1990s Global poverty rates were
down but progress was extremely uneven
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Take away China and there was actually a
worsening of poverty headcount numbers over the
1990s!!!
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Reduction in child malnutrition has been slow?
prospect of reaching the targets of Millennium
Development Goal is in doubt
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120 million primary-school-age children were not
in school in 1999.53 of them girls.74
living in South Asia and Sub-Saharan Africa.
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Ratio of girls to boys in primary and secondary
school ()
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Infant mortality rates
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Pakistan - by the end of the 1990sNot only was
the poverty situation alarming!but prospects for
its reduction were also bleak
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Headcount Of Poor - Pakistan
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Details of the Poverty Trends in Pakistan
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Poverty Trends across Provinces
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Poverty Diagnostics

• Poverty is strongly related to lack of basic
  needs
• Poor have low access to health related
  infrastructure
• Poor communities have lower access to health
  facilities and immunization coverage
• Poor have higher dependency ratios
• More than 1/3rd of the poor households are headed
  by aged persons

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Poverty Diagnostics (contd.)

• 27 poor versus 52 non-poor households are
  headed by literate persons
• Poverty is higher when head of the household is
  unskilled agricultural worker
• Cultivable land owned by poor versus the non-poor
  is 0.27 and 0.84 acres per capita, respectively

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Investment as of GDP
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Consolidated Public Expenditures(as of GDP)
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The Poverty Reduction Strategy Papers

• Born in late 1999 out of the pressures from
• HIPC
• The lessons from the experience with the World
  Banks 1990 strategy of Poverty Reduction
• The Recommendations of the Meltzer Commission
  Report to the American Congress

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The PRSPs are an essential requirement for debt
relief under the HIPC initiative and good
business plan for concessional assistance under
IDA
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The PRSP requires

• A long term domestically owned holistic Vision
  with a strategic articulation of the perceptions
  of poverty and how to address these encapsulated
  in a three year plan
• Clear and Verifiable time-bound M E Indicators
• A participatory consultative process at the grass
  roots level
• Coordination and Efficiency through a Medium Term
  Budgetary Framework
• PRSPs ensure IFI partnership as well as means to
  monitor domestic performance

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Lessons from the WB Experience - Policies

• A strategy that emphasizes the mutually
  reinforcing benefits of growth and human resource
  development is relevant.
• Most recent empirical evidence however, points to
  the importance of contingent factors such as
• property rights,
• a capable bureaucracy and
• the distribution of assets in mediating the
  poverty reducing effects of growth, and to the
  negative effects of corruption on both inequality
  and poverty.

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Lessons from the WB Experience - Policies

• Human development has proven to be vital for
  long-term growth. However
• Need to improve the interaction between policies
  that sustain long-term growth,
• Need to improve the distribution as well as the
  stock of human capital,
• Need to curb corruption and enhance the social
  and physical capital of the poor, that are likely
  to make the real difference.
• These are all elements making up the new
  Comprehensive Development Framework underpinning
  the PRSP process.

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Lessons from Country Studies

• Growth that is based on rural development has a
  notable impact on overall levels of poverty.
• Lack of social consensus and government
  commitment can be a major obstacle to reform,
  while weak institutional capacity can hinder
  prospects for implementation of an effective
  country poverty strategy.
• Slow private sector development, weak governance
  and high aid-dependence slow down the prospects
  for growth and reduce the long-term
  sustainability of growth and improvements in the
  social sectors.
• There is a need to monitor not only the level,
  but also the depth and severity of poverty.
  Safety nets are a necessary condition for
  ensuring that the poor are protected. All three
  elements of the 1990 strategy are important for
  sustained poverty reduction.

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Lessons from Project Experience

• Reaching the poor and making tangible differences
  to their well-being depends on
• a good project design
• macro institutional environment
• specific local institutional capabilities
• cultural acceptability of different types of
  interventions.
• Tightly targeted projects with good
  communication, supervision and in-built
  flexibility can work, even in difficult
  institutional/policy environments.

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Lessons from Project Experience (contd.)

• There is no reason to expect that the benefits
  from social funds and decentralization will
  always be pro-poor.
• There is a need to better understand the synergy
  between key areas of public and private actions
  to better address the priority needs of the
  chronically poor.

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Core Principles of Pakistans I-PRSP

• Engendering growth
• Governance reforms
• Creating income generating opportunities
• Improving human development
• Reducing vulnerability to shocks

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Revenue and Expenditures (1998-99 to 2000-01
actual)(2001-02 to 2003-04 IPRSP)
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Trends in Crucial Growth Rates(1998-99 to
2000-01 actual)(2001-02 to 2003-04 IPRSP)
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Trends in Poverty(1992-93 to 1998-99
actual)(2000-01 to 2003-04 IPRSP)
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I-PRSP Challenges

• extracting Pakistan from a debt trap,
• accelerating growth,
• improving social indicators, and
• restoring the credibility and integrity of public
  institutions.

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Major I-PRSP Challenge

• Macroeconomic stabilization
• Increasing tax revenue in order to provide more
  fiscal space for poverty reduction initiatives
• overcoming adverse debt dynamics.
• Maintaining a prudent monetary policy in order to
  keep inflation low
• Increasing export growth to improve the external
  debt situation.

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Major I-PRSP Challenge

• Growth promotion
• Acceleration of reforms in the areas of
• Privatization
• Irrigation and drainage
• Energy tariff rationalization
• Karachi electric Supply Company
• Gas pricing
• Civil service reforms
• Tax administration
• Agriculture support services

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The Bigger Challenge!

• Getting growth going and ensuring that the Growth
  is pro-poor and translates into faster poverty
  reduction
• tackling the distribution issue

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Success of the I-PRSP hinges on

• Governance reforms and devolution
• Reducing incentives for corruption
• Governance reform agenda that includes reforms of
  fundamental institutions
• Central bank
• Tax authority
• CBR
• Police
• Judicial system
• Civil service
• Auditor general and controller general of
  accounts
• Reforms in the public financial management
  systems and institutions
• Establishment of an effective anti-corruption
  agency.

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And the crucial assumption for Poverty Reduction
under the I-PRSP

• The success of the devolution plan in improving
  access to education, health and other public
  services

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Major Strength of the I-PRSP

• Confirms the governments commitment to
  sustaining and expanding targeted interventions
  that focus on disadvantaged sections of society,
  especially in rural areas
• Highlights the key role of agricultural sector in
  poverty reduction

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Weaknesses

• I-PRSP does not question whether current policies
  of poverty reduction are appropriate or adequate,
  especially in the rural strategy.
• It does not present an analysis of alternatives

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Weaknesses

• The I-PRSP does not
• recognize the fact that greater tariff
  adjustments will be required in the energy sector
  in future and that tariff increases must be
  accompanied by improvements in operational
  performance.
• acknowledge that privatization will take time,
  and that in the interim pressing investments will
  be needed.

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Weaknesses

• I-PRSP does not fully exploit the potential role
  of the private sector in bringing education to
  the underprivileged.

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Challenges and Risks Outlined by the I-PRSP

• Challenges
• To raise financing, and
• To improve governance and institutional capacity
• Risks
• Political opposition to reforms,
• Lack of continuity,
• Insufficient institutional capacity, and
• Exogenous shocks

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Common weaknesses in all PRSPs

• Inadequate information on the determinants of
  pro-poor growth
• Inadequate linkages between economic growth,
  macroeconomic and structural policies and poverty
  reduction
• Inadequate linkages between public expenditures,
  poverty outcomes, and costing.

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Comparison of I-PRSPs and PRSPs shows

• significant differences between the full and
  interim PRSPs in terms of
• data availability
• quality of data analysis and policy formulation
• development of medium term budgeting procedures
• participatory processes

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Pakistan has committed to developing a FULL PRSP
by March 2003

• This requires
• A wide ranging consultative process to ensure
  that there is consensus on the long-term vision,
  ownership and sustainability of the program
• The long term vision requires consensus on the
  perception of poverty and on the strategic
  prioritization of interventions at all levels

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The full PRSP requires

• Strategic coordination of resources - including
  aid - over the medium term
• Development of detailed Provincial and
  sub-provincial level PRSPs

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The full PRSP requires

• Expenditure tracking
• To monitor spending in important sub-sectors and
  programs
• To track expenditure data by economic
  classification
• Monitoring of intermediate and outcome indicators
• Adequate implementation of monitoring system.
  And the building of technical capacity (at
  provincial and district level)
• Consensus on a nationally acceptable poverty line

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The full PRSP requires

• Systematic data collection and analyses of
  poverty dynamics and vulnerability that is
  domestically owned
• Analyses informing of possible adverse impacts of
  some key macro/structural policies on the poor
  and other socio-economic groups
• Assessment of key poverty programs like Khushal
  Pakistan and Katchi Abadi etc.

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The time is extremely short the challenges are
enormous!