Govt approaches lenders amidst credibility crisis

Pakistan asks World Bank, ADB to carry out damage and need assessment.

ISLAMABAD:

Pakistan, hampered by a credibility crisis, has again requested international lending agencies to carry out damage and need assessment (DNA) of its flood-affected areas. The move comes as the country seeks billions of dollars for reconstruction. It is hoped that an external report will reassure international donors who currently have reservations over the possible misappropriation of funds.

A similar exercise was carried out last year by the World Bank (WB) and the Asian Development Bank (ADB). However, this failed to persuade the international community to provide much-needed funds, due to the government’s inability to chalk out a viable implementation and spending strategy.

Sources from the Economic Affairs Division (EAD), Pakistan’s window to the rest of the world in financial matters, told The Express Tribune that Pakistan has sought help from the WB and the ADB.

The government has requested an immediate survey to assess the losses, which includes deaths and injuries, as well as damage to property, crops, infrastructure, and households. The floods have severely hit the national economy, although the magnitude is not as severe as it was in 2010. The government has initially estimated a half percentage point loss in national output. The overall economic growth target for this year is 4.5 per cent. So far 23 districts in Sindh have been devastated by the floods, affecting some 8.7 million people.

This will be the third significant study jointly administrated by the WB and ADB in recent years in Pakistan. The lenders also carried out a damage and needs assessment of the Malakand Operation, launched to root out terrorists in 2009, and of last year’s floods.

An official from the EAD admitted that due to the credibility crisis international lenders do not take the government’s prepared reports seriously. “At least they will have a look at a report prepared by these lending agencies”, he said on condition of anonymity.

The WB Country Resident Mission confirmed the government has approached the WB and the ADB for DNA. “The World Bank on its part is considering the government’s request and in consultation with the Asian Development Bank will get back on how best to jointly help the government in this undertaking”, an official from the WB told The Express Tribune.

The DNA looks at the extent of damage and the required needs for rehabilitation and reconstruction of lost assets and infrastructure. It also assesses how to generate jobs and economic productivity. The stated objective of the DNA is to provide the strategic underpinnings for medium-to-long-term reconstruction, recovery planning, prioritisation and programming.

A govt official said that the DNA was just the first step and it cannot work until the government has a multipronged strategy to allay the concerns of the international community.

Last year the donor community did not make significant pledges in the absence of a well-coordinated strategy. During Pakistan Development Forum meetings, held in November 2010, international donors sought a clear mechanism to trace the trails of their money.

This was lacking, however. The government could not even complete the Citizens Damage Compensation Programme, which is considered the most transparent programme. Against the government’s announcement to give Rs100,000 to each affected household it has only released Rs20,000 so far.

The ADB and the WB announced $2 billion and $1 billion for post-floods reconstruction, but did not release significant chunks of these funds due to differences over ownership. The ADB has recently signed a $640 million agreement for flood-related reconstruction while the WB also inked a $125 million agreement for a cash transfer programme in March.

Published in The Express Tribune, September 24^th,  2011.