Another package: WB displeased with govt’s reform policies

Most targets attached with $6billion loans were not achieved.

ISLAMABAD:

With the World Bank Group all set to approve an $11billion new country partnership strategy on Thursday, the international lender has raised concerns that the government’s policies remain ineffective in introducing reforms in the country.

Declaring the performance of the outgoing programme ‘unsatisfactory’, the multilateral lender underscored that according to completion report of Pakistan Country Partnership Strategy (CPS) 2010-14, most targets attached with $6 billion external loans were not achieved.

The self-assessment of the WB’s country office rates the achievements of the CPS program outcomes as “moderately unsatisfactory”.

The completion report has been attached with the draft report of CPS 2015-19 that the WBG will approve on Thursday, aimed at providing $11 billion financing to Pakistan over the next five years.

However, a significant chunk of the proposed financing is linked with the government’s ability to introduce reforms in areas that could not be achieved during previous years despite availing loans.

The government has come under fire for agreeing to policies prescribed by international lenders to seek fresh loans –a strategy that has backfired, as on one hand it has failed to reform critical areas and on the other hand has added to the debt burden of the country.

Analysts attribute lack of domestic ownership and understanding of ground realities by international consultants as main reasons behind the failure of lender-dictated policies.

The WB had targeted four critical areas in its current strategy. The report shows that in two areas, governance and public sector and infrastructure the outcomes were “moderately unsatisfactory” while in the other two areas, human development and vulnerability and security and conflict, the outcomes were moderately satisfactory.

The report states that based on approved projects through mid of current financial year and anticipated operations during the remainder of the fiscal year, the comparatively concessionary lending will total to $5 billion while expensive policy lending will amount to $762 million by end of June this year, totaling $5.8 billion.

The loans extended by the WB’s arm –International Finance Corporation are not added into these calculations. The IFC committed over $2.3 billion so far, most of it in to the private sector.

$6 billion results

Several key outcomes under the pillar of ‘Governance and Public Sector’ were not achieved, leading to a moderately unsatisfactory rating, according to the completion report.

The outcomes were linked to the reduction in the fiscal deficit and increases in tax-to-GDP ratios were not achieved. The WB is again targeting these areas in its new policy.

The report states that under pillar of ‘Human Development and Vulnerability’, the CPS programme outcomes were moderately satisfactory with the majority of outcomes achieved.

A large lending program supported the core program elements in education, social protection and disaster relief. The WB had extended loans after 2010 floods, helping to improve its rating on human development index.

“The country team considers achievements of CPS outcomes under pillar of infrastructure to be moderately unsatisfactory”.

Published in The Express Tribune, April 30^th, 2014.