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Acknowledgements

I would like to acknowledge certain figures without whose help; I would not have been able to complete this thesis. First of all, I am grateful to Almighty Allah, without whose will and support, nothing can be made possible. Through out the research and in life the following sayings, along with several others, of our Holy Prophet Muhammad (PBUH) have guided us. He who knoweth his own self, knoweth God and Who are the learned? They who practise what they know. I am very grateful to our supervisor, ZAR WAJIDI Dr. ABU for guiding us in Research work and providing useful information and material, which lead to the completion of this thorough research. The gratification also goes out to all the respondents of the Survey conducted, for not only taking out time to be part of the research, but for their Patience and cooperation. The research is of course thankful to my parents for supporting me through everything and always being an inspiration. I would also like to mention the immense support that I have been getting from her sisters, friends, class fellows and loved ones.

Table of Contents
S. NO Chapter 1
1.1 1.2 1.3 1.4 1.5 1.6

Contents Introduction

Page no.

Poverty 1 Poverty in Pakistan.. About Asian Development Bank(ADB). About Pakistan and ADB.. Poverty Reduction Strategy. Poverty Reduction Partnership Agreement

Chapter 2
2.1

causes and Cures


Poverty in Pakistan CAUSES AND CURES

Chapter 3
3.1 3.2 3.3 3.4 3.5 3.6 3.7 3.8 3.9

Economic Growth
Economic Growth Economic Assessment and Outlook. Agreement Between ADB And Government Poverty. Reduction of Pakistan. Mid-Term Strategy (2002_2006).. Poverty Reduction Strategy Paper Latest about ADB and Government of Pakistan. Evaluation of PRSP. Risks to PRSP

CHAPTER 4
4.1

Literature Review

Pakistan Policies needed to tackle poverty, Unemployment: ADB 4.2 Fighting Poverty In Pakistan

4.3 4.4 4.5 4.6

Poverty Alleviation In Pakistan Impediments To Poverty Alleviation For a Better Cause. Securing a Nation.

Chapter 5
5.1 5.2

Survey Analysis
Survey Questions.. Survey Responses, Results and Conclusions

Chapter 6 Conclusions And Recommendations


6.1 6.2 Conclusions .. Recommendations .

INTRODUCTION

1.1 Poverty:
Poverty is the shortage of common things such as food, clothing, shelter and safe drinking water, all of which determine our quality of life. It may also include the lack of access to opportunities such as education and employment which aid the escape from poverty and/or allow one to enjoy the respect of fellow citizens. According to Mollie Orshansky who developed the poverty measurements used by the U.S. government, to be poor is to be deprived of a those goods and services and pleasures which others around us take for granted.Ongoing debates over causes, effects and best ways to measure poverty , directly influence the design and implementation of poverty-reduction programs and are therefore relevant to the fields of public administration and international developments. Poverty may affect individuals or groups, and is not confined to the developing nations. Poverty in developed countries is manifest in a set of social problems including homelessness and the persistence of ghetto housing cluster.

1.2 POVERTY IN PAKISTAN

is a major economic issue. Nearly one-quarter of the

population is classified poor as of October 2006. The declining trend on poverty in the country seen during the 1970s and 1980s was reversed in the 1990s by poor Federal policies and rampant corruption. The government of Pakistan has prepared an "Interim Poverty reduction Strategy Paper" that suggest guidelines to reduce poverty in the country. According to the World Bank, the program has tangible success, with the World Bank stating that poverty has fallen by 5 percent since 2000. Incidences of poverty in Pakistan rose from 2226% in the Fiscal Year 1991 to 3235% in the Fiscal Year 1999. They have subsequently fallen to 25-28% according to the reports of the World Bank and UN Development Program reports. These reports contradict the claims made by the Government of Pakistan that the poverty rates are only 23.1%3. The CIA fact book places the 2006 poverty rate at 24 percent. For many people in developing countries, poverty means difficulty in living, as well as lack of basic services in health and education. In Pakistan lack of access to credit, training to income generating activities, basic social services and infrastructure are the critical factors behind the persistence of substation poverty. Poverty is widely spread in Pakistan and is pre dominating the rural phenomenon. Nearly about two third of the population of Pakistan live in rural areas, in 1970s to 1980s the poverty rate of Pakistan fell down but again in 1990s it rose up, According to the Government of Pakistans poverty reduction strategy papers, currently about 10 percent of the population is chronically poor, but a much larger portion of the population [for about 33 percent] is considered vulnerable and likely to sink in poverty. The incidence of poverty varies between rural to urban areas, and from one province to the next. In many other mountainous parts of the country where communities are small, isolated and where there are few major urban centers, poverty is widely and evenly disturbed. There is controversy between the government officials and independent economists about the statistics of poverty but both the segments are agreed that out of four Pakistani living under the poverty line THREE are women.

In the last It is concluded that if a person who is living in Pakistan earns less than a dollar per day then he is in poverty net. On other hand if he has lack of facilities than it is poverty of opportunity. So we can say that more than 40% of the population of the Pakistan is living below the poverty line.

1.3 ABOUT THE ASIAN DEVELOPMENT BANK:

.ADB is a multilateral development bank owned by 67 members, 48 from the region and 19 from other parts of the world. ADBs main instruments for helping its developing member countries are policy dialogue, loans, equity investments, guarantees, grants, and technical assistance (TA). Over the last 4 years (20042007), ADBs annual lending volume averaged $7 billion, with TA averaging $218 million and grant-financed projects $616 million. In 2007, lending volume was $10 billion, with TA at $243 million and grant-financed projects at $673 million.

1.4 ABOUT PAKISTAN AND ADB

Pakistan is the ninth largest shareholder in ADB among its regional members. Overall, Pakistan is the 13th largest shareholder. ADB Membership Joined 1966 Shares held 77,080 (2.17%) Votes 90,312 (2.04%) Marita MagpiliJimenez is the Executive Director and Sibtain Fazal Halim is the Alternate Executive Director representing Pakistan on the ADB Board of Directors. Peter Fedon is the ADB Country Director for Pakistan. The Pakistan Resident Mission (PRM) was opened in 1989 and provides the primary operational link between ADB and the government, private-sector, and civil-society stakeholders in its activities. PRM engages in policy dialogue and acts as knowledge base on development issues in Pakistan. The Pakistan government agencies handling ADB affairs are the Ministry of Finance and the Ministry of Economic Affairs & Statistics. Pakistan has received about $18.59 billion in loans since joining ADB in 1966, with about $12.3 billion disbursed as of the end of 2007. The lending program in 2007 was a record that included almost $2.0 billion in loans and $20.2 million for technical assistance grants. ADB is working with the Government and the private sector to improve the countrys infrastructure , energy security , and basic public services . Aligned with national development objectives, ADBs partnership priorities aim to attract investment, create champion industries and jobs, and improve the quality of life of citizens.

A new Country Partnership Strategy (CPS) for

that is currently being finalized , and

is scheduled for consideration by ADBs Board of Directors in 2008 , aims to support Pakistans strategic objectives of prosperity and poverty reduction.

ADB AND PAKISTAN

ADB and Pakistan have enjoyed a longstanding development partnership. As of 31 December 2003, ADB's cumulative assistance to Pakistan totaled $13.55 billion in the form of 228 public sector loans. In addition, ADB has provided $109 million in grants for 273 technical assistance projects. Fifty one percent of the total assistance provided by ADB to Pakistan has been through the Asian Development Fund (ADF) window. Besides these, ADB has provided a total of $467 million for private sector year

development in the country. The 2003 was another eventful year in Pakistan. Pakistan's economic

performance(as mentioned earlier) continued to improve and stabilize during 2003, and key the

macroeconomic fundamentals at beginning of 2004 were better than at any time in the past decade.

The Pakistan Resident Mission (PRM) consolidated its operations in Pakistan in 2003. Amongst the main achievements during the year, the Country Strategy Program Unit

(CSPU) for Pakistan (2004-2006) has been finalized and approved by the ADB Board. In terms of lending assistance, 5 Projects totaling $870.7 million were approved. In addition, technical assistance (TA) grants for a total of $10.028 million were approved.

1.5 POVERTY REDUCTION STRATEGY:ADB has rededicated itself to reducing poverty in Asia and the Pacific. To ensure that all aspects of ADB operations are driven by poverty considerations, ADB's Board approved the Poverty Reduction Strategy.

In Pakistan, poverty declined until the 1990s. Since then, slow economic growth, low human capital - especially for women -- and poor governance have contributed to rising poverty. Today, about 32 percent of the population lives below the poverty line. Preliminary findings of ADB's Poverty Analysis in Pakistan show extreme pockets of poverty in rural Sindh and southern Punjab, whereas the whole province of Balochistan is poor by all indicators of poverty and development. PRM held extensive stakeholder consultations at each of the four provincial capitals, culminating with the holding of a High Level Forum in Islamabad in April 2001. The process will conclude with the signing of a Partnership Agreement with the Government in June 2002. South Asia, one of the poorest sub regions in the world, now has more than half a billion poor people. Poverty in South Asia is due primarily to low income low human development prevailing inequality social exclusion gender bias

HIGHLIGHTS OF ADB'S POVERTY REDUCTION STRATEGY

In ADB's view, poverty is a deprivation of essential assets and opportunities to which every human is entitled. Everyone should have access to basic education and primary health services. Poor households have the right to sustain themselves by their labor and be reasonably rewarded, as well as have protection from external shocks. Beyond income and basic services, individual and 9

societies are also poor, and tend to remain so, if they are not empowered to participate in making decisions that shape their lives. Poverty is better measured in terms of basic education health care nutrition water and sanitation income employment and wages empowerment

The primary responsibility for finding solutions to poverty lies with countries themselves, but success will depend on the united efforts of Government and civil society, and on strong and sustained support from the international community. ADB's poverty reduction strategy is anchored on pro-poor economic growth social development good governance

1.6 POVERTY REDUCTION PARTNERSHIP AGREEMENT (BETWEEN THE GOVERNMENT OF PAKISTAN AND THE ADB)
This Partnership Agreement

between the Government and the Asian Development Bank 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. This Agreement reflects the Governments vision and goals for poverty reduction and key priorities of the ADBs Country Strategy and Program (CSP) which was formulated based on the findings of ADBs Poverty Analysis and High Level 10

Poverty Forum. The Agreement also serves to focus on attainment of the Millennium Development Goals (MDGs) for 2015. These goals and targets will be reviewed as required to allow the Agreement to remain current and responsive to changing needs. There are agreed measures for monitoring the implementation of this agreement. The Agreement recognizes the vital and complementary assistance provided by other aid agencies in support of the Governments poverty reduction efforts, and the need for an effective partnership among development partners to achieve the goals, strategy and actions.

2.1 Poverty in Pakistan: Causes and Cures


By Afaq Ali Khan Poverty is a multi-dimensional phenomenon, which encompasses economic, political and social deprivations of the people in a country. The denial of basic and essential needs to the population gives rise to the concept of poverty.

The recent global trends of poverty suggest that rapid economic growth over a prolonged period is essential for its reduction. At the macro level, economic growth implies greater availability of public resources to

improve the quantity and quality of education,

health and other services. At the micro level,

economic growth creates employment opportunities, increases 11

the

income

of

the

people

and

therefore

reduces

poverty.

In Pakistan, Poverty Reduction Strategy was launched by the government in 2001 in response to the rising trend in poverty during 1990s. It consisted of the following five elements:-

(a)

Accelerating

economic

growth

and

maintaining

macroeconomic

stability,

(b) Investing in human capital, (c) Augmenting targeted interventions; (d) Expanding social safety nets; and (e) Improving governance.

The net outcome of interactions among these five elements would be the expected reduction in transitory and chronic poverty on a sustained basis. The reduction in poverty and improvement in social indicators and living conditions of the society are being monitored frequently through large- scale household surveys in order to gauge their progress in meeting the targets set by Pakistan for achieving the seven UN Millennium Development Goals (MDGs) by 2015. According to MDGs, Pakistan is required to reduce poverty by half by 2015 from the level of 1990. To assess the state of poverty, Planning Commission, has already notified an official poverty line based on caloric norm of 2,350 calories per adult equivalence per day. This poverty line is approximately equivalent to Rs 748.56 per month per adult equivalence. in 2000-2001 (Pakistan Economic Survey 2004-05). According to Pakistan Economic Survey, the growth oriented government policies and foreign remittances have reduced poverty significantly. At the national level, headcount decreased from 34.46 percent in 2000-01 to 23.9 percent in 2004-05 showing a reduction of 10.5 percentage point over this period of time. Annual growth of 21 percent in pro-poor expenditures during the period of 2000-01 and 2004-05 contributed to approximately 13 million people moving out of poverty. Since FY 02, the economy created 10.62 million jobs, thereby reducing the open unemployment rate to 6.2 percent by FY 05-06.

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Income and consumption based measures reflects only one dimension of poverty; lack of opportunity due to poor information, education and health are some dimensions in which poverty manifest itself. According to a UNDP report, 65.5 percent population of Pakistan earns less than two dollars per day. According to the Social Policy Development Centre (SPDC), 88 percent of Balochistans population, 51 percent of NWFP, 21 percent of Sindh and 25 percent of Punjabs population is prey to poverty and deprivation.

According to the ADB report, poverty is spreading in Pakistan due to the rising population, Pakistans internal situation, agriculture backwardness, unequal income distribution, defence expenditure, increase in utility charges and rise in unproductive activities.

Due to rapid growth of population, the number of dependents is increasing; earners have to carry the burden of the increasing number of dependents. This situation is leading to decrease in the per capita income of the people of the country.

The largest sector of the economy, the agri sector, is heading towards backwardness as 93 per cent of the farmers are concerned with small farms whose per capita land is less then 10 acres.

Some options for poverty alleviations are: The poor in Pakistan cannot simply be seen (as much of the literature does) as free individuals suffering from merely adverse resource endowments, and making choices in more or less free markets. It is such a paradigm, which induces the government to think that all it needs to do to reduce poverty is to allocate more resources to the poor or to the local governments who are supposed to represent them.

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Similarly some of the large NGOs operating in many different districts pursue poverty alleviation by trying to provide micro credit to the poor. Increased resources by the government or micro credit by NGOs may be a necessary but is not a sufficient condition for overcoming poverty. Thus the analysis and evidence within this new poverty paradigm suggest that the key to overcoming poverty is to empower the poor to get better access over markets, governance, and the institutions that provide public services such as health care, education and justice.

The new survey evidence shows that the poor lose as much as one-third of their income due to unequal access over input and output markets and extortions by the local administration. For example, as much as 51 percent of the extremely poor tenants borrow money from the landlord.

Focus should be given to boost agriculture (agro-industry, agri-business and live stocks) to reduce poverty. It is recommended that incentives and subsidies should be given to the farmers to produce more output. It promotes jobs, increases income of the farmers, creates domestic demand for goods and services, help for controlling food inflation and improve the life of vulnerable segments of the society. The Construction industry is the driving force of an economy because it accommodates skilled, semiskilled, and unskilled work force and contributes through a higher multiplier effect with the forward and backward linkages in the economy. The construction industry through linkages effect, with about 40 building material industries, support investment and growth climate and help reducing poverty by generating income opportunity for poor household.

The role of microfinance should be strengthened. The poor use financial services not only for business purpose but also invest in health and education to manage household emergencies. The evidence shows that health is a major trigger that pushes people into poverty and the poor into deeper poverty. Due to the inadequacy of the governments health facilities, as many as 85 percent of the poor go to private allopathic medical practitioners for treatment.

The expenditures on such treatment are so high that poor households are obliged to borrow mostly from informal sources to finance the medical expenses of their families. Targeted poverty

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alleviation programmes, for instance direct transfers, such as Zakat, nutritional programs for children, employment generation through infrastructure development projects and credit based self employment program, are helpful to reduce poverty. Many studies have shown that economic growth is a necessary, not sufficient condition to reduce poverty. A higher and sustained economic growth must be accompanied by other poverty alleviation measures such as investment in human capital like education, health and other human development activities, like safety net measures, are essential to reduce poverty. Education is considered a key to change and progress, therefore focus should be given to produce human capital that is best suited to the needs of society.

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3.1 Economic Growth


Three and a half years back the Government launched a stabilization and broad based structural adjustment program, so as to address severe macro-economic disparities manifested in an unsuitable and growing public debt and looming BOP crisis. This was considered to be vital to improving the investment climate and to raise the economy to a higher growth path on a sustained basis. The objective of the stabilization program was:

a) to reduce the fiscal and external current account deficit b) to restore macroeconomic balance c) to bring the BOP to a viable position and d) to build up foreign exchange reserves with a view to strengthening the economy.

These reforms have helped in transforming the Pakistani economy from a highly regulated to a more open market-orientated economy creating an energetic private sector expanding its role to finance power, social sectors and to improve the countrys macro economic fundamentals. These efforts have yielded impressive results. Despite a series of domestic and external shocks such as regional tensions, unprecedented drought, events of 9/11 and the war in Iraq, Pakistans economy has made significant progress towards revival of growth and macroeconomic stabilization.

Over the next 5 years it is projected that the PSDP will grow from 3.2% of the GDP in 20022003 to 5.5% of the GDP in 2007-2008. the growth in 2003-2004 id projected at 3.6% of the GDP, 4.1% of the GDP in 2004-2005, 4.4% of the GDP in 2005-2006 and 4.9% in 2006-20071. 16

The overall fiscal deficit is expected to reduce from 4.5% in 2002-2003 to 3.5% of the GDP in 2007-2008. the reduction is projected at, 3.9% of the GDP in 2004-2005, 3.8% of the GDP in 2005-2006 and 3.6% of the GDP in by 2006-2007.

However, this positive outlook is subject to certain risks that will need to be carefully managed to ensure that the process of economic recovery is not derailed. There is also the risk that weaknesses in implementation capacity may hamper good macroeconomic management and improved service delivery at the local level. Further, global factors, such as a slowdown in the world economy, may also impact economic outlook.

3.2 Economic Assessment and Outlook


The economys overall performance improved significantly in FY 2003. The gross domestic product (GDP) growth rate is estimated at 5.1% compared with 3.4% in FY2002 (Appendix 1). The higher growth was made possible by strong performance in all sectors of the economy: 4.1% growth in agriculture, 5.4% in industry (7.7% in manufacturing), and 5.3% in services. Supported by the sharp fall in interest rates, total investment increased to 15.5% of GDP in FY2003, and the fiscal deficit declined to 4.6% of GDP. For the first 9 months of FY2003, inflation declined to 3.3%; exports and imports increased by 16.6% and 21.9% respectively; and workers remittances increased to $3.1 billion from $1.5 billion during the same period in the last fiscal year. As a result, the current account surplus, excluding official transfers, increased to $2.6 billion compared with $1.0 billion during the same period in the last fiscal year. The foreign exchange reserves with the State Bank of Pakistan (SBP), at $9.3 billion on 31 May 2003, have increased to 8 months of imports. The reduced economic uncertainty because of Pakistans improved macroeconomic fundamentals should boost investment and economic growth. The rate of inflation is expected to remain low. On the external account, both exports and imports are likely to continue to grow strongly, and remittances are expected to sustain their current high levels. Thus, while the trade gap will widen, the current account on the balance of payments is expected to remain in surplus. 17

3.3 Poverty Reduction Agreement between ADB and Government of Pakistan:Long-Term Goals (2002-2011)1
The Government and ADB will endeavor to undertake all measures necessary to reduce the incidence of poverty to below 15 percent by 20112. Key human development goals set by the Government for 2011 include:

a) reducing infant mortality from 90 to 30 per 1,000 births b) increasing life expectancy from 62 to 69 years c) the net primary school enrolment rate from 42 to 100 percent and d) the adult literacy rate from 52 to 78 percent, with the target of achieving gender balance in each category.

The aim will also be to increase the economic growth to 6.5 percent while bringing down population growth to 1.6 percent. The above targets are ambitious, but reflect the results of a series of wide-ranging consultations between the Government and its development partners, which began at the meeting of the PDF in March 2001. The Government has also taken the lead in preparation of the Poverty Reduction Strategy Paper (PRSP), and has actively consulted with the donor community in the process. The bilateral donors have also committed to increased assistance for social sectors through grants and debt swaps. Until the 1990s, economic growth in Pakistan was much faster than most other low income countries. However, Pakistans social indicators compare unfavorably to other countries with similar levels of per capita income. In 1993, Pakistan launched the Social Action Program (SAP), with broad-based external support, to address its poor social indicators. However, the results have at best been mixed. Also, in recent years economic growth has slowed significantly and as a result the declining trend in poverty in Pakistan during the 1970s and 1980s was reversed in the 1990s. The incidence of poverty is estimated to have increased from 27 percent in 1992-93 to 32 percent in 1998-99. Poverty rose more sharply in the rural areas, and in 1998- 99

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the incidence of rural poverty (36 percent) was substantially higher than urban poverty (23 percent). Sustained economic growth is critical for poverty reduction. However, to revive growth it is necessary to create an environment conducive for private economic activity, and encourage domestic and foreign investment. That requires improvements in governance over a broad front including judicious implementation of macroeconomic stabilization policies, better management of public resources, establishment and enforcement of the rule of law, and a move to a less intrusive system of economic regulation. At the same time, it is clear that poverty is multidimensional, and is characterized as much by lack of income and non-fulfillment of basic needs as by low level of human development, lack of access to social infrastructure, and vulnerability. Experience with the Social Action Program (SAP) has revealed that while lack of resources is a serious constraint in the improvement of human development, mismanagement and other governance issues resulting in poor service delivery are a more pressing concern in Pakistan. Feelings of powerlessness and vulnerability are the most important intangibles that shape the lives of the poor. Vulnerability is worsened by poor governance, not only because it is manifested in exclusion from decision-making processes, but also because inequitable governance systems hamper access to public goods and services. For poverty reduction in all its dimensions, therefore, it is imperative to address governance issues responsible for social exclusion of the poor, women, and minorities from access to basic services, poor public sector performance, endemic corruption, and the loss of trust by the citizens in public institutions. Consequently, the achievement of Pakistan's long-term development and poverty reduction objectives hinges on the success of the Governments wide-ranging governance reforms which are to be implemented in partnership with civil society institutions and the private sector. To achieve the goals of the Governments PRSP, the Government and ADB have agreed on the following priorities for the long term: (i) improved quality of governance, including devolution of power to local communities, restructuring of government to increase its effectiveness, and reform of the civil service, judiciary and police (ii) the need to achieve broad-based growth through development of small and medium enterprises (SMEs) and a diversified agriculture sector

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(iii) Asset creation for the poor, particularly women, through support of microfinance and rural development programs (iv)Improving human development, particularly through programs for education and health, with gender equity and (v) Social safety nets with targeted programs for vulnerable groups. The relationship between gender disadvantage and poverty is evident from womens lower entitlement of social and physical assets. ADB will work with the Government to develop targeted projects for women, ensure gender mainstreaming across all projects, and promote policy and institutional reforms for awareness and enforcement of womens rights and representation in all aspects of economic and social development. The degradation of natural resources has also had a devastating impact on livelihoods of the poor, given that the rural economy in particular is built around the sustainable use of natural resources, principally water and cultivable land. ADB will assist in building environmental management capacity in the country to protect the natural resource base.

3.4 Mid-Term Strategy (2002-2006)


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 peoples participation 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. These are in line with the overall thrust of ADBs Medium Term Strategy and priorities for lowincome countries such as Pakistan. The key areas of ADB assistance have been defined, in

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consultation with the Government, around the shared strategic priorities of sustainable pro-poor growth, inclusive social development, and good governance.

The ADB has been operating in Pakistan since 1966 in a variety of capacities. In Pakistan ADB provides soft loans to the government as well as technical assistance grants implemented by a diversity of partners. The key areas of ADB assistance in Pakistan are defined around the strategic priorities of sustainable pro-poor growth, inclusive social development, and good governance. ADB has first supported microfinance development in Pakistan through the microfinance components of a series of community-based multisectoral area development programs, funded by ADB loans approved between 1996 and 1999. The first ADB stand-alone microfinance initiative was the Microfinance Sector Development Program (MSDP) launched in 2001 and implemented by the Pakistani Poverty Alleviation Program (PPAF). The MSDP comprised two loans, a first loan to support the reform program of the microfinance sector and a second loan to provide services to the poor and institutional strengthening. The most recent initiative, dated 2003, is ADB lending under the Rural Finance Sector Development Program, implemented by the Ministry of Finance, which includes two loans to support the institutional strengthening of the rural development bank, Zarai Taraqiati Bank Ltd (ZBTL), the State Bank of Pakistan and the project management unit at the Ministry of Finance.

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This diagram shows the Pakistan portfolio performance quality indicators for sovereign lending.

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3.5 POVERTY REDUCTION STRATEGY PAPER Addressing IPRSP (Interim Poverty Reduction Strategy Paper) Gaps
One of the important additions to the Poverty Reduction Strategy in the full PRSP is the focus on some economy-wide issues like gender mainstreaming, employment and environment. These issues cut across many sectors and policy regimes that were missing in the IRSP.

GENDER EQUALITY AND EMPOWERMENT OF WOMEN


Findings of the poverty assessment carried out shows that women are among the poorest and most vulnerable communities in the country. Pakistan is amongst the highest in the world for maternal mortality rates in the world. Womens access and control over productive resources are limited. Lack of skills, limited opportunities in the job market and social and cultural restrictions limit womens chances to compete for resources in public. The Government of Pakistan believes that any poverty reduction effort must address the gender issue in order to address poverty meaningfully. Gender is a theme integrated in all sectors, interventions and policies. Mainstreaming gender issues into policies, development plans and programs is the key strategy to promote gender equality in Pakistan. In the longer term, the government will support the use of gender sensitive budgeting (GSB) in analyzing the federal and provincial government budgets to determine the extent to which resources are allocated to address gender inequality. This will not only improve womens status but will also contribute to national, social and economic development of the country.

Women participation rate in the governance structure of Pakistan has improved sharply. Following the amendments in the constitution of Local Government Ordinance, 2001, at least 33 percent of seats in each tier of local government are women. In the National Assembly, more than 60 seats are held by women out of 332 seats while over 128 seats are held by women out of 728 seats in the provincial assemblies. Similarly, there are 17 women in the Senate out of 100

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members. Women participation in politics as voters, candidates and political activists is increasing. Representation by women is better than in most countries of the world, including the largest democracies of the world. This provides a good opportunity to address the gender gap in the social, economic and health sectors. To address gender inequality concerns, the Government approved the National Policy for Development and Empowerment of Women in 2002. The policy focuses on: i) Social empowerment of women (education, health, law and access to justice, women in the family and community) ii) Economic empowerment of women (poverty, access to credit, remunerated work, women in rural economy, sustainable development) iii) Political empowerment of women (power and decision making)

The government is taking a number of policy measures to enhance the share of women in economic benefits. First, the government is making efforts to provide easy access to micro-credit especially through available organizations such as Pakistan Poverty Alleviation Fund (PPAF); Rural Support Programs (RSPs); First Women Bank (FWB); Agricultural Development Bank (ADB) and Khushali Bank. Second, the government will ensure that women in general and female headed households in particular, women bread earners, and women with disability in particular, have priority in accessing credit on soft terms from FWB and the Khushali Bank and other financial institutions for setting up their business, for buying properties, and for house building. Third, it will increase women's capacity to earn by improving access to sources of livelihood, particularly in agriculture and livestock production. Fourth, it will provide equal opportunities for women in remunerated employment, which also accommodate women-oriented work patterns. Fifth, it has taken measures to improving the facilities for the education, training and skills development for women, to enter and re-enter the labor force. The training centers set up in different sectors impart training in, rug-making, embroidery, knitting and garment-making, field 25

assistants, livestock assistants and agricultural extension works, nurses and medical technicians, skill training in computer, telex, radio, television, social forestry, vegetable gardening, livestock farming, food processing, fruit preservation and teachers training etc.

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These graphs show the difference of literacy in Pakistan. Literacy rate is high in urban areas but in rural areas literacy rate are very low due to some cultural problems. But literacy is very important for both male and female as well. And if we give a chance to female to learn more than females are more educated and knowledgeable because they are sharper than male. Education is the most important factor for reducing poverty in Pakistan. During few years Pakistan become more illiteracy country of this world.

EMPLOYMENT STRATEGY TO REDUCE POVERTY


The generation of productive employment is an important policy goal for poverty reduction. The rate of unemployment adjusted for underemployment exceeds 10 percent in Pakistan. The participation rate for females is lower than males even when allowance is made for self-employment and unpaid family work. The main contributory factor for the prevailing high unemployment rate has been the deceleration of economic growth during the last decade. Improvement in the growth prospects of 27

Pakistan as described earlier augurs well for employment generation. The Government is planning to boost growth in sectors which have a large impact on employment. Three types of sectoral priorities are being considered. First, by boosting the construction and housing sector. Second, by increasing labor-intensive exports especially high valued agriculture and garments through appropriate incentives and thirdly, increasing labor based content in public sector investment, especially in infrastructure like roads, irrigation and rural development. The Khushal Pakistan Program and Tameer-e-Pakistan combines the aims of increasing employment opportunities and providing essential infrastructure in rural and low-income urban areas. Micro-credit for the poor will be accompanied by a package of services to borrowers to reduce poverty. Pakistans public sector Technical Education and Vocational Training (TEVT) is still predominantly supply driven. Some efforts have been made to involve the private sector in the system, including the establishment of center management committees and skill development councils for training for higher productivity. Most workers still pick up their skills in the private sector, formal and informal and in private training institutions, particularly in information technology. Child labor in Pakistan is a socio-economic phenomenon that exists because poor families are pushed by the economic necessities to force children to enter the labor market. A nationwide survey by ILO in 1996 estimated that there are about 3.3 million children economically active in the labor market. Although the government is committed to eliminate child labor, it is pursuing a policy of gradual elimination of all forms of child labor and immediate elimination of the hazardous and exploitative forms of child labor under ILOs International Program for Elimination of Child Labor. To achieve this objective, certain specified target programs have been initiated. 175 schools have been selected by setting up workshops to impart training to needy students and working children for two years. On completion of these courses, they are provided toolboxes which enables them 28

to earn a livelihood through self employment. In collaboration with ILO, the European Union is also helping the government for setting up 18 Community Education and Action Centers for combating abusive child labor through prevention, withdrawal and rehabilitation of ex-bonded child laborer. The Government has established a Fund of Rs 100 million for education of working children and rehabilitation of bonded labor. The government has implemented a comprehensive legal framework to eliminate bonded labor from Pakistan.

The Government has also set out targets and activities in the National Policy and Plan of Action to Combat Child Labor (May 2000) and for abolition of Bonded Labor (2001). The objectives of the Plan are progressive elimination of child labor from all economic sectors, immediate withdrawal of children from worst form of child labor, preventing entry of under-aged children into the labor market through universal primary education and family empowerment, and rehabilitation of working children through non-formal education, pre-vocational training and skill development.

ENVIRONMENT POVERTY NEXUS

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Environmental concerns like water, air, and land pollution, degrading agricultural lands, shrinking forests, diminishing supplies of clean water, dwindling fisheries and the threat of growing social and ecological vulnerability from climatic changes and the loss of biological diversity, have implications for long-term sustainable growth, and are adding to erosion of the already unsustainable livelihoods of the poor. To reduce poverty, it is vital to understand and address the linkages between poverty and environment. The key linkages between poverty and the environment have been divided into three categories: i) Environment and Livelihoods: the poor depend heavily on a range of environmental 'goods' for their livelihoods including land, potable and irrigation water, fisheries and forest products. They suffer disproportionately when their access to these resources is denied or limited. ii) Environment and Health: the poor suffer most when air and water are polluted. Women and children are particularly affected. Inadequate sanitation, poor hygiene practices and lack of access to safe drinking water are major causes of ill-health and death. iii) Environment and Vulnerability: the poor are particularly vulnerable to environmental disasters, conflict and competition for scarce natural resources.

Recognizing these linkages helps to identify the opportunities for tackling the root causes of poverty. In this way, it provides a strategic focus for prioritizing practical solutions to poverty alleviation and sustainable development. The Government is fully aware of the key poverty environment linkages in Pakistan. The poor have a limited access to cultivable lands (more than 50% of the rural population is landless while a small percentage of landowners control over 33% of agricultural lands while there is increasing incidence of water-logging and salinity) and other natural resources such as forests, rangelands and water, insufficient access to safe drinking water and sanitation, and inadequate provisioning to solid waste management.

The important initiatives taken in this regard include enactment of Environmental Protection Ordinance 1983, establishment of provincial and the Federal Environmental Protection Agencies, constitution of Pakistan Environmental Protection Council, formulation of National Conservation 30

Strategy, promulgation of National Environmental Quality Standards, enactment of Pakistan Environmental Protection Act-1997, formulation of Pakistan Forestry Sector and Biodiversity Action Plans, and adoption of National Environmental Action Plan (NEAP) with a focus on clean air; clean water; solid waste management; and eco-system management. NEAP support program proposes a wide range of technical, institutional, regulatory, social and economic interventions grouped under six major sub-programs: (i) Policy coordination and environmental governance (ii) Pollution control (iii) ecosystem management and natural resources conservation (iv) energy conservation and renewable (v) dry land management and (vi) grass roots initiatives. Government is signatory to a number of major environmental management conventions and protocols. The most significant achievements in recent years are the incorporation of environmental concerns in government policies and initiation of process of Environmental Impact Assessment (EIA) in the development schemes. To address the poverty-environment nexus effectively, the Government will continue to implement projects and programs aimed at achieving the objectives of NEAP, Millennium Development Goals and targets set at the World Summit on Sustainable Development and framework on WEHAB (water, energy, health, agriculture and biodiversity) through a participatory approach. Special attention will also be given to policy reforms, promulgation and enforcement of environmental legislation, enhancing coordination and collaboration amongst stakeholders, capacity building, land use planning and zoning, introduction of green accounting, development of monitoring and evaluation systems, disaster management, promotion of appropriate environmental technologies, public awareness and education and building of partnerships at the regional and global level.

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Pakistan has received about $18.59 billion in loans since joining ADB in 1966, with about $12.3 billion disbursed as of the end of 2007. The lending program in 2007 was a record that included almost $2.0 billion in loans and $20.2 million for technical assistance grants. ADB is working with the Government and the private sector to improve the country's infrastructure, energy security, and basic public services. Aligned with national development objectives, ADB's partnership priorities aim to attract investment, create champion industries and jobs, and improve the quality of life of citizens.

3.6 LATEST ABOUT ADB AND GOVERNMENT OF PAKISTAN:ADB, Pakistan sign $180 million loan deal

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Updated : Wednesday December 3 , 2008 2:41:42 PM

ISLAMABAD: Pakistan and Asian Development Bank (ADB) here Wednesday signed agreement for the first installment of the Multi-tranche Financing Facility (MFF) for the National Trade Corridor Highway Investment Programmed.

Out of total $900 million ADB loan, the first tranche of $180 million assistance will be used for the construction of a 58-kilometre highway (Section 1) between Faisalabad and Khanewal.

The highway project would be executed by National Highway Authority (NHA).

The loan agreement was signed by ADB Pakistan Resident Mission's Country Director, Rune Stroem and Secretary Economic Affairs Division, Farrukh Qayyum, while the project agreement was signed by ADB Country Director and NHA, Altaf Ahmed Chaudhry.

The $900 million MFF is a part of the $5.36 billion investment plan by Pakistan's National Highway Authority (NHA), which envisages upgrading of the highway from Karachi to Peshawar as well as links to the port of Gwadar and China.

On completion, travel time between Karachi and Peshawar, a distance of 1,700 kilometres will be cut from 72 hours to 36 hours.

Speaking on the occasion, Farrukh Qayyum said that the National Trade Corridor would help reduce the transportation cost, eliminate bottlenecks in the logistic chain, boost economy, generate jobs and ultimately reduce poverty.

He said that the objective of the loan was to achieve the targets of Vision 2030 by raising the trade to the gross domestic product ratio from 30 percent to 60 percent.

Reducing Poverty through Rural Development in Sindh, Pakistan


The Asian Development Bank (ADB) is providing a US$50 million project loan to reduce poverty through rural development in southern Sindh, Pakistan. 33

The Sindh Rural Development Project will tackle poverty in canal-irrigated areas of Badin, Mirpurkhas, Sanghar and Thatta districts. The project aims to improve the social and economic standing of the poorest groups, focusing on tenants and agricultural laborers, marginal owners-cum-tenants and small village-based artisans, particularly women. This will be achieved through:

Improved governance and legal support Enhanced social processes at the community level A boost to rural livelihoods Upgraded rural infrastructure and settlement improvement Project management support

A majority of rural households in the four target districts do not own agricultural or homestead land. The deeply entrenched poverty of tenants and agricultural laborers is perpetuated by the sharecropping tenancy system. The project will be implemented at district level, promoting a partnership between government, nongovernment organizations, and community-based organizations. Better governance and legal support will also pave the way for more favorable sharing arrangements for tenant farmers. Expected beneficiaries include 96,000 households in 3,200 village groups. The project loan, drawn from the concessional Asian Development Fund, has a term of 32 years, including a grace period of eight years, with interest charged at 1% during the grace period and 1.5% per year subsequently. The Government will finance about US$11.25 million equivalent. Beneficiaries will contribute about US$1.25 million for civil works. The Local Government Department of the Government of Sindh is the project's executing agency.

In ADB's view, poverty is a deprivation of essential assets and opportunities to which every human is entitled. Everyone should have access to basic education and primary health services.

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Poor households have the right to sustain themselves by their labor and be reasonably rewarded, as well as have protection from external shocks. Beyond income and basic services, individual and societies are also poor, and tend to remain so, if they are not empowered to participate in making decisions that shape their lives. Poverty is better measured in terms of

basic education health care nutrition water and sanitation income employment and wages empowerment

The primary responsibility for finding solutions to poverty lies with countries themselves, but success will depend on the united efforts of Government and civil society, and on strong and sustained support from the international community. ADB's poverty reduction strategy is anchored on

pro-poor economic growth social development good governance

Pro-poor, sustainable economic growth


The lesson is clear: growth can reduce poverty by generating employment and incomes, and labor intensive growth can reduce it even faster. Thus, policies that encourage labor intensive growth are powerful pro-poor measures. These policies include

the removal of market-distorting interventions, such as overvalued exchange rates import and/or export restrictions credit subsidies, and reliance on state-owned enterprises

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Other policies that fall in this category are


development of a conducive environment for the private sector programs aimed at increasing employment and income generating opportunities for women and other groups that may be outside the formal labor force, e.g. microfinance

Social Development
Economic growth can effectively reduce poverty only when accompanied by a comprehensive program for social development. Social development must be targeted. Human capital is the primary asset of the poor, and its development is of fundamental importance in the war against poverty. Therefore, every country needs to have a comprehensive, national poverty reduction strategy. Pakistan is in the advanced stages of developing this. It will provide for

adequate budgetary allocations for human capital targeting of basic services for the poor removal of gender discrimination effective population policy social protection

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Good Governance
The quality of governance is critical to poverty reduction. Good governance facilitates participatory, pro-poor policies as well as sound macroeconomic management. It

ensures the transparent use of public funds encourages growth of the private sector promotes effective delivery of public services helps to establish the rule of law

As the Asian crisis has shown, good governance is also essential to avoid or reduce the severity of economic crises in an era of increasing liberalization and globalization. The Agreement also supports the Government's other long-term goals of raising life expectancy and literacy and education levels, while reducing infant mortality and population growth. In the medium-term, the Agreement aims to:

Promote good governance; Generate productive job opportunities and provide adequate physical infrastructure for faster economic growth;

Support human development by improving access of the poor to literacy, education and health programs;

Support the development of small- and medium-sized enterprises; Encourage private sector development; and Promote regional cooperation.

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3.7 EVALUATION OF PRSP


Expenditure of PRSP Allocation of adequate resources for PRSP programs is an imperative. But, in an environment where the main focus of macroeconomic stabilization program (the key to reviving growth) has been towards controlling the fiscal deficit then generating resources for poverty reduction is a formidable task.

In recent years less than or about 4 percent of GDP has been allocated to poverty-focused subsectors. Allocations to human capital formation (education; health; population planning) have been less than 2.5 percent of GDP, allocation for key infrastructure sectors (agriculture; irrigation; water supply and sanitation) have also been less than 1 percent of GDP. Aggregate expenditures on what is characterized as, Development have been less than 3 percent of GDP. Detailed costing of proposed initiatives and a more involved assessment of expenditures is difficult as the process of provincial consultations in provincial PRSPs is still continuing. The Provincial PRSPs will then form the basis of Pakistans PRSP costing.

Given the on-going evolution of PRSP and the complexity of linking public expenditures with outcomes such as improved educational and health outcomes; acceptable nutritional status and reduced poverty incidence including reduced probability of falling into poverty through vulnerability to economic shocks (price increase; health condition; natural calamity; death of a bread earner) , it is difficult, if not impossible; to carry out detailed costing of PRSP Programs. A process is to increase allocations to:

(i) high probability of impact on poverty sub-sectors (ii) Civil Service/Governance reforms and judicial reforms activities to improve the delivery of service and

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(iii) Monitoring systems which are recursively linked to policy revisions i.e. ability to modify policies and investments if outcomes sought are not being achieved.

The following table presents the recommended allocations for 2006-07 with the base year allocations being for 2000-01 increasing pro-poor budgetary expenditures at the rate of 0.2 percent of GDP per annum until a model is developed for costing of social sectors.

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Monitoring

Well targeted anti-poverty outlays and social transfers are essential ingredients of a comprehensive poverty reduction strategy. The real test of public expenditures lies in their impact. One of the central components of the PRSP is creation of a system to monitor the implementation and outcome of poverty reduction policies. The PRSP monitoring framework includes a set of indicators that track policy inputs, their outputs and progress towards intended policy outcomes. The setting up and implementation of a monitoring mechanism had been a demanding task involving selection of appropriate indicators that may provide the sought after information, identification of information sources for these indicators, highlighting gaps or weaknesses, and design and implementation of institutional mechanisms for collection, collation and dissemination of data to policy-makers and other stakeholders for evaluation and determining policy choices. PRSP monitoring therefore, provides the means for all stakeholders (government, civil society, donors etc.) to assess the success of the PRSP policies in attaining the desired outcomes, and provides a basis to review and modify these policies as necessary. It is therefore concerned with monitoring inputs (policy actions, particularly public spending), the immediate (intermediate) outputs of these policies, and the outcomes and final impacts they are designed to achieve. It is important that inputs and intermediate outputs of public actions are connected, in a logical, causal sequence, to outcomes in terms of an improved life for the poor. The monitoring framework for the PRSP includes:

i) ii) iii)

Institutional arrangements that are needed to make this monitoring system work Framework of indicators to be monitored Process of identifying and implementing steps necessary to strengthen or develop existing information sources and

iv)

Arrangements that need to be put in place for interpreting the monitored indicators and feeding conclusions back into management and policy change.

PRSP input process (pro-poor expenditures) have been clearly defined in PRSP and a system to monitor these expenditures on a quarterly basis is in place. To monitor outcome and impact in 40

human development, the government has established in conjunction with the provinces and line Ministries, a preliminary set of indicators that can be tracked on a short/medium term and long term basis, linking public expenditures with results on the ground been developed with participation of provincial governments. These expenditures are in line with the governments macroeconomic framework and have been protected and tracked over the medium term. It needs to be appreciated that there is an implementation lag between expenditures incurred and outcomes achieved that make it difficult to assess policy performance immediately. For instance, even though public expenditures on primary schools may be increased, higher gross/ net primary enrolment rates will take place only after a time lag, and it will take even more time before higher literacy rates are achieved. The government has identified a set of intermediate indicators that will depict the effect of policy interventions over a relatively shorter period of time, on an annual basis. As a part of robust financial sector reforms undertaken by the Government, the Project for Improvement of Financial Reporting and Auditing (PIFRA I & II) aims to improve public sector accounting and financial system, thereby providing a basis for enhancing public sector accountability and improving institutional capacity for economic policy making and management. The new system is technology intensive and will replace the existing manual system for maintenance of accounts. A new chart of accounts is being implemented and online accounting system through SAP at the sub-national levels is underway. This would ensure mechanisms for regular tracking of poverty related expenditures at the federal, provincial, and district levels through consolidated monthly and quarterly accounts, appropriation accounts, and monitoring on development expenditures. The system would also facilitate timely reconciliation. Data on district level expenditures will be possible once district level accounting systems and processes are in place by 2005. The government however expects to target district level expenditure monitoring from FY 2005. With full implementation of New Accounting Model (NAM), timely quarterly reporting of reconciled PRSP data on the federal, provincial, district and tehsil tiers will be ensured.

3.8 Risks to PRSP Achieving the PRSPs growth targets depends crucially on the implementation of the reform program. Steadfast implementation of the reform program is essential for the creation of an 41

enabling environment for the private sector, as well as to improve public service delivery. Weakness in tax administration and the energy sector (often mentioned as fundamental constraints to private sector development) need to be addressed promptly. Maintaining low and stable inflation will also be the key to achieving the growth objectives and monetary policy will need to be geared accordingly.

The State bank and public banks have undergone major staff development programs. The CBR has embarked on a through-going reform, including staff renovation. Agency improvement program in recruitment, training and promotion. Nevertheless, weaknesses remains in all areas, particularly in the newly formed district and local governments, although a number of donorassisted initiatives are underway to strengthen capacity, particularly at the district level. Adverse shocks could set back the governments reform agenda. As, a result growth could fall short of the ambitious targets set out in the PRSP. In particular, the continuing political or security concerns could slow the projected increase in private investment. In case of a major deterioration of security and political conditions (as is the fear), a reverse of capital inflows could put pressure on the balance of payments. Hence the authorities should have some leeway to protect the PRSP spending some degree in case of adverse developments (for instance, weather is a major factor as well; relating to the drought fears in Baluchistan).

Given these risks, the government should address a detailed discussion on the case of low growth scenario and its implications for vulnerable groups and poverty trends.

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LITERATURE REVIEW

4.1 Pakistan Policies needed to tackle poverty,

Unemployment: ADB
From The Daily Times By Sajid Chaudhry ISLAMABAD: An Asian Development Banks poverty literature review paper has highlighted that unemployment and poverty cannot be left to the market to resolve.

Rising trends in poverty can only be arrested if enough productive and remunerative jobs are created, and this will only be possible only if investment levels increase. The level of investment in Pakistan has stagnated at low levels, while public development expenditure has fallen, displaced by government commitments to reduce the fiscal deficit.

The focus of current policies to reduce rural poverty is the agriculture sector, despite the fact that a large number of poor rural households depend on non-agriculture sources for their livelihoods. Policies thus need to be designed to generate job opportunities in the rural non-farm sector as well, but without undermining the importance of agriculture.

Although the incidence of sharecropping has declined over time, a substantial proportion of rural households still operate as share-tenants. This represents the poorest group in the agriculture 43

sector, and indicates a need to improve the land tenure system in Pakistan. Tenancy legislations have been promulgated over the last 50 years to improve tenants positions, but have yet to be implemented. Taking this step will help improve landlord-tenant relationships in favor of tenants. The objectives of Poverty, Economic Growth, and Inequality: A Review of Pakistans Poverty Literature paper prepared by Ghulam Mohammad Arif of the Poverty Group Country Policy Operations Unit of the Asian Development Bank Pakistan Resident Mission was to review the poverty literature produced in the last decade, in order to understand the nature and causes of the rise in poverty that occurred in the 1990s.

In addition to examining trends and geographical variations and the dynamics of poverty, the paper reviews the relationship between poverty and economic growth, structural adjustment, population growth, employment, and foreign remittances. Rural poverty is also examined in terms of land distribution and tenure patterns, the role of the non-farm sector and rural power structures. Finally, the paper briefly discusses the poverty and human development nexus and microand macro-level responses to poverty.

It stated that the consensus among recent studies is that poverty declined in the 1970s and 1980s, but increased sharply in the 1990s. The analysis of poverty transition over the IFPRI survey years shows an increase in the probabilities of moving into poverty and a decline in that of escaping it. Moreover, the movement of the poorest households out of poverty was relatively higher in urban areas than in rural areas, indicating that limited economic opportunities for the poorest rural households prevent their transition from poor to non Poor. Nonetheless, a substantial proportion of households close to the poverty line have been able to make this transition in urban and rural areas. The group of households just above the poverty line experienced a rapid decline in welfare, particularly those in rural areas. The large movement of rural households into poverty shows the inadequacy of existing policies in reducing rural poverty. Economic growth in the past has not automatically trickled down to benefit the poor. Pakistans growth performance over the last three years indicates that the stage is probably set for high growth, which can be made pro-poor by creating additional jobs for the poor as well as enhancing their education and skill levels. In addition to explicit actions to ensure that this 44

occurs, efforts should be made to ensure that growth does not inadvertently increase inequality. More resources need to be diverted to the education and health sectors for the benefit of the poor, and the quality of public sector education, particularly in rural areas, also needs to be improved. Finally, the evidence on employment and poverty, as reviewed in this paper, reinforces the argument that unemployment and poverty cannot be left to the market to resolve. This sharp decline in development expenditures is a serious matter because it plays a complementary role in poverty reduction. Falling development expenditure reduces private investment and leads to slower economic growth while increasing unemployment and undermining the maintenance of services and capital stock. The reduction in debt servicing has already created fiscal space, although more fiscal space is likely to be required

4.2 Poverty in Pakistan


Kamal Siddiqi April 13, 2005 Source: http://www.chowk.com/articles/8996

Why we aren't winning this war? The recently released report on Pakistan by the Department for International Development (DFID), the main aid giving body of the British government, joins a chorus of voices being raised over the governments inability to tackle poverty despite a major recovery in the state of the economy. The report came some days after Prime Minister Shaukat Aziz made a statement data an economic forum in Jeddah that he expects Pakistan to achieve a growth rate of about eight per cent in the next few years. Mr. Aziz holds the view that a higher growth rate will, in itself, take care of poverty. However, there are many that do not agree with this assertion. One of the strongest critics of the growth removes poverty policy is a Karachi-based think tank, the Social Policy and Development Centre. Economic growth is only one pillar of the plan to fight poverty. Other areas that need to be tackled are improving governance and devolution, investing in human capital and targeting the poor and the vulnerable. While the SPDC view has consistently been

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while accelerated that GDP growth represents the necessary condition for poverty reduction, it cannot be achieved through growth alone. There is an alternative view that poverty reduction is not only a function of increased economic growth but also of diminished inequality. In the mean time, the level of poverty deteriorated to 34 per cent of the total population at present as against 30.6 per cent in the 1990s. This tells us that the poor in Pakistan are getting even poorer. There is no doubt that Pakistan has made an economic turnaround. What remains to be seen is whether the government is able to achieve a similar turnaround in the social sector. According to the United Nations Development Program, Pakistan slipped in the Human Development Index (HDI) from 138 to 144. Of particular concern is the countrys high child mortality rate. Overall, the social sector has suffered from years of neglect and under-funding. International financial institutions have commented that Pakistan falls in that category of countries in which advances are being made in some areas but resources or policy deficiencies are blocking progress towards several key goals. In its annual report for 2003, the World Bank disclosed that while Pakistans economy has grown more than other low-income countries, its social sector growth in comparison has lagged. The report also noted that the educated and welloff urban population in Pakistan lived not so differently from their counterparts in other countries of similar income range but the poor and rural population lags behind when the same comparison is made. This points to a widening gap between the rich and the poor in the country. For its part, the Musharraf government has committed a significant part of its foreign assistance to social sector development. In 2004, the government announced that half of the five year $3 billion assistance plan from the US would be earmarked for social uplift. But how serious is the government about implementing a long term strategy when it does not have a good record of following through such programs. Pakistan is also one of the few countries in the world where the number of illiterate people continues to increase with each passing year. The number of illiterate persons in Pakistan has risen from 28 million in 1972 to an approximate figure of 46 million at present. To blame is a steadily increasing school drop out rate. This has risen from 40 percent in 1996-97 to about 54 per cent in 1999-2000. At present, Pakistan is amongst three countries in Asia that have literacy rates that are under 40 per cent. In the South Asian region, Pakistan is at the bottom of the education ranking of countries, with an adult illiteracy rate of about 56 per cent and the lowest net primary enrolment rate in South Asia at 46 46

per cent. Pakistans failure to realize the importance of human capital formed through education is reflected in the low allocations for education in the five-year plans. In the sixth plan, this allocation stood at less than two per cent. By the seventh plan, this was increased to three per cent. Now, however, in the eighth plan, the allocation has jumped to eight per cent. The government now plans to open 270,000 literacy centers in the country by 2005 to reverse the dubious distinction the country enjoys with regards to its literacy numbers. Part of the reason for this is pressure from donors to include education as part of the overall agenda. However, for this to work and produce results, the government needs to ensure a consistency in planning and implementation of the program. Embarking on literacy programs on the insistence of foreign donors is one thing; following these through to ensure that both children and adults not only enroll in these programs but also complete them, is another. The country may have a huge human resource base but there is a shortage of technically skilled people. In the absence of this labor, it would not be possible for Pakistan to further strengthen its industrial and economic base. The launch of the second phase of the Pakistan Poverty Alleviation Fund (PPAF) in 2004 came at a time of growing criticism over the manner in which the government has handled the issue of poverty reduction over the past few years. In its annual report last year, the State Bank had said that the biggest challenge before the countrys economic managers is to create as many jobs as possible in the short term. The report warned that given the carry over of the past legacy, current geopolitical and security situation, a non-supportive external economic environment and weak institutional capacity, it would simply be a pipe dream to expect a sharp fall in poverty levels in the short term. The argument that the SBP gave was that poverty would not be eradicated unless its root causes, such as depravation of human capital are addressed adequately. With over 550 million people in South Asia living below the poverty line, it can be assumed that a large percentage of the worlds poor people live in the subcontinent. In September 2003, a Karachi man burnt his four children and then committed suicide. His wife had passed away some time back and in his suicide note, the man wrote that without a job, he could not feed his family and decided to go for this option. Some medical circles alluded to the fact that the man was mentally unstable. It is true that this act can only be committed in a state of extreme desperation or psychological imbalance. This form of protest is on the rise as unemployed, desperate men and women make one last statement against the state of affairs that reduces them and their families to utter destitution. The rise in the number 47

of suicide cases in Pakistan is an indication of the feeling of utter frustration and despondency affecting a growing number of people and their families. Statistics compiled on suicides reveal that 153 committed this act in 1996 while in 2002, this figure had risen to over 3,100. According to figures compiled by the World Health Organization, approximately one million people commit suicide annually across the globe. Of these 10 per cent take place in South Asia. In Pakistan, one of the main reasons people choose to take their own lives is economic deprivation. Unemployment and a rise in inflation as a consequence of which a person simply cannot support himself or his family is a predominant reason for suicide. There are millions of people who live in varying degrees of poverty. Abject poverty can be seen in the rural areas of the country, safely hidden from the powers that be in the major cities of the country. Ignoring the advice of home grown economists, the Musharraf government accepted the IMFs prescriptions, which squeezed the Pakistani people under harsh conditions, extracted unimaginable sacrifices, ruined the middle class and increased the suicide rate. Now puncturing the Musharraf progress card, the IMF says poverty is stagnant in Pakistan despite the three "successful" years of PRGF. It tells Pakistan that factors like extraneous political circumstances combined with local growth and continuing drought conditions in several parts of the country were responsible for the no change in the poverty levels. This prognosis and the IMFs statistical analysis may provide food for thought for the economic wizards of the country but bring no relief to the poor.

4.3 Poverty Alleviation in Pakistan


Article Abstract by: khudi Author : Dr Tanvir Hussain Bhatti Published: July 06, 2008 Source: The DailyTimes Abstract: Poverty Alleviation in Pakistan

Poverty is a self-perpetuating evil; therefore, the insolvency-stricken people rarely escape from its steamrolling noose throughout their lives. They inherit their glooms and dooms to their upcoming generations. This has driven a wedge between the affluent and the underprivileged categories. Poverty has given birth to unbridled crimes, prevalence of frustration, blight of bribery, smear of greed, moral degradation, infectious diseases, malnutrition, psychological illnesses, committing of suicide, leg pulling and cutthroat competition. Thus aspirations of the deprived people never materialize throughout their lives and their sufferings end with their 48

deaths

while the rich led luxurious lives and enjoy every kind of facility. Various regional and international assessment reports suggest that illiteracy is a major stumbling block to hamper pace of economic progress in Pakistan. Competitive examinations provide opportunities to the educated citizens on the breadline to get a white collar job but even these examinations are discriminatory. The loopholed assessment methods favor the siblings of the rich by further marginalizing the impoverished. These unfair evaluation systems shatter trust of the candidates in the institutions and they start thinking in terms of nepotism and palm greasing. The rulers present rosy picture to the nation while playing to the gallery but it is crystal clear that massive pockets of poverty, unemployed youth, illiterate teeming millions, rampant corruption, gender inequality, volatile law and order situation, skyrocketing prices of commodities, lack of access to basic amenities and socio-economic stratification are ubiquitous. Thus people in our country are much poorer than projected by the monetary planners. There is crying need to launch poverty reducing development schemes to uplift socioeconomic status of the public. The government should open technical educational institutions to generate experts. Industrial sector must be made vibrant to expand industrial base that can mount productivity and provide opportunities of employment. Emancipation of women is mandatory to bring them in the mainstream national life. The men in the driving seat should reduce lavish spending. The civil sector, army, bureaucracy, politicians, clergy and mass media should join hands to work with a unitary approach to liberate the country from the current morass. Patriotism should be indoctrinated among the rank and file so that they can work with a sense of commitment and dedication. Impoverishment cannot be trimmed down by changing statistics; therefore, the regime in power should frame sound strategies to liberate the masses from the poverty trap that is perpetually squeezing them

4.4 Impediments To Poverty Alleviation


Book Summary by: KhilendraBasnyat

Author : Khilendra Basnyat Published: February 01, 2008 Source: The DailyTimes
Despite some progress in human development in the past five decades, one-third people in the developing world still live under the poverty line. About 16 percent share of global income is earned by developing countries, which comprise three-fourths of the world population. Therefore, the scourge of poverty will continue to plague these countries. Over the past decades, development efforts of national and international community towards poverty alleviation have played an important role, especially in less developed countries. However, a large chunk of the total population still live under extreme poverty, and human

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development indicators present a gloomy picture. Due to this, the global challenge of poverty alleviation in least developed countries is increasing. Pakistan has the highest per capita income. India is an industrial giant, enjoying the lion''''s share in most resources. However, Bhutan, Bangladesh, Maldives and Nepal have scanty resources. Poverty in this region is mainly concentrated in villages and widely distributed among people in both rural and urban centers. It is aggravated by the rising prices of basic goods as a result of demand pressure, inflationary expectation, production cost, etc. While excessive growth of money supply and fiscal deficits have created extra market power from the demand side, supply effect on process is experienced when the production cost is high. According to an official report, trade among South Asian countries has remained at les than five percent. Although globalization has been in vogue in these countries, it has not helped reduce poverty. Rather it has widened income inequalities. As per a previous study, in South Asia, about forty-three percent of the population lives in absolute poverty compared to fourteen percent in East Asia (excluding China), twenty-four percent in Latin America and thirty-nine percent in Sub-Saharan Africa. The percentage of population deprived of basic services such as access to safe drinking water, health and sanitation in some South Asian countries is also high. This is testified by the fact that the percentage of population without access to safe drinking water is thirty-seven in India, forty in Pakistan, fifty-two in Nepal and forty-three in Sri Lanka. Regarding access to health services, thirty-five to fifty-five percent of the population is deprived in Pakistan, Bhutan and Bangladesh. However, India and Sri Lanka appear to be doing better than others with figures of fifteen and forty-seven percent respectively. The percentage of population deprived of sanitation facilities is also high in South Asia even by developing country standard in case of Bangladesh, Bhutan, Maldives, Pakistan and Sri Lanka where the figure ranges form forty-seven to seventy-six. While India is slightly below the South Asian average at twenty-nine, Sri Lanka appears to be doing well at eighteen. In South Asia, malnourished percentage of population is as much as fifty-three compared to the overall poverty figure of thirty-five. Likewise, in Pakistan the incidence of child malnutrition is thirty-eight percent compared to the overall poverty figure of thirty-five. The overall weighted average in south Asia for the incidence of child malnutrition is fifty-seven percent compared to the poverty incidence of thirty-five percent. Although this region is the poorest region, it is the most militarized region of the world. The arms race between India and Pakistan has adverse impact on poverty alleviation in this region. It is because these two countries account for ninety-three percent of the total military expenditure in this region. While global military spending declined by thirty-seven percent in the past decade military expenditure in South Asia increased by twelve percent. The military expenditures in this region are taking place

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4.5 Poverty Issues in Education


Book Summary by: AcaDemon Published: November 12, 2006 Source: The DailyTimes Poverty is an issue which is a challenge for both the teacher and the student who lives in Poverty. It is an issue that more children are destined to face as the poverty class grows both in the United States and abroad. The purpose of this study is to understand the effects of poverty upon the educational attainment and ability of these children, through a literature review, as well as direct observation of students. The findings of this study reveal that children in poverty are subject to detrimental effects upon their learning abilities from the experience of poverty. It shows, however, that the shorter the duration of poverty, the less the long-term effects on the child. The paper includes numerous figures and graphs. Paper Outline: Abstract Introduction Purpose Findings Review of Literature Summary and Conclusion Works Cited

4.6 For a better cause


Book Summary by: Sahar Majid Author : Awareness Pakistan Published: March 05, 2007 Source: The DailyTimes Creating awareness towards disabilities, shedding the discriminatory attitude from able-bodied people towards physically handicapped and bringing the disabled in mainstream of life is the primary goal of our organisation. This was stated by Noorudin S. Bhamani at the launch ceremony of a visual CD about disabilities and the disabled.Bhamani is the founding member of Awareness Pakistan, an organisation that works to support physically challenged. The event was attended by close friends, well-wishers, general public and media representatives.Bhamani, who himself is physically paralysed didnt let his disability come into his way and he has been steadfastly struggling in his life. My aunt gifted me a house after I became physically incapable, but I, despite my handicap, earned money and bought a portion of that house for my family, told he.I dont like the discriminatory behaviour of people towards us. I want them to treat us like normal persons, he added.The lifelong dream of Bhamani came true through the launch of this CD in which he put all his thoughts and experiences. His wife Shameera Bhamani and daughter Shelina Bhamani put all their efforts in making his dream, a reality. They had been with him in every difficult time of his life.On the occasion, two sightless bothers, Bilal Shafiq Patel and Asif Shafiq Patel were also present. These guys are not blessed with vision but they are living a normal life and doing respectable jobs. Bilal is a TV artist and Asif is a fully-fledged motor mechanic. Bilal was especially invited to entertain the guests. During conversation, he told me that he is used to work on computer for hours. He regularly checks his email and surfs the internet like normal people do.Awareness Pakistan is a non-government organisation, which 51

doesnt take any financial support from the government. We run this association with the help of some of our well-to-do and sincere friends, told Bhamani.My aim in life is to bridge the gap between the disabled and able-bodied persons. I want to bring them closer and dispel the negative concepts that prevail in the minds of people, said he excitedly.They have also designed a website for their union www.awarenesspakistan.com this site will help you to learn about the members of their community and their activities.Bhamani expressed that he and the members of his group dont want financial or emotional support from the government and capable people but what they want is the equal status in society.

4.7 VIEW: Securing a nation Shaukat Qadir


Particular to a country like ours, where a sizeable military is being maintained, which consumes a sizeable portion of the annual budget, the political debate must surely focus on what a population groaning under the burden of inflation should put first: a comprehensive poverty alleviation programme or our requirements for effective defence Most regretfully, in a country like ours, the politico-military leadership often hides behind the term national security so as to cloak in secrecy all that it does; and it continues to remain unaccountable to the people of the state for some of its most questionable activities. Perhaps it is time to consider just how a nation should be provided security and what, indeed, makes a nation secure. Today we are faced with the scourge of terrorism and suicide bombers, which has added new dimensions to our problems of insecurity. Rousseaus definition of the relationship between state and society is the first attempt of its kind by a political scientist. In brief, he contends that mankind has one inalienable right freedom and the sole purpose of the existence of the state is to ensure this inalienable right individually and collectively to society (the citizens). He goes on to add that the state, therefore, is the only organ legitimately authorised to take recourse to the use of force, but solely to ensure the freedom of the society. Flowing from Rousseaus contention, for almost three centuries it was assumed that a states legitimate right to the use of force was against any external threat, domestic unrest, and of course in order to police the state in protection of its citizens. Obviously, therefore, this constituted national security. As the study of social science progressed, its students began to realise that there were other aspects of security which the state was responsible for as well. Every citizen should be able to find means of earning a livelihood, otherwise he/she would starve therefore the concept of employment security and, where a citizen was unable to find employment, the state provided a bare minimum for him/her to make ends meet.

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The state also needed to ensure that the employer provided a healthy work environment and should not be able to maltreat employees; thus job security. And then, food security, followed by health security, security of education, and so on, until security became an all encompassing term; today we even have the concept of environmental security. From the foregoing, it would be fair to conclude that the security to be provided by the state to its citizens can still draw its basis from Rousseaus concept of ensuring the inalienable right of each member of the states citizenry. However, security is now deemed to include all aspects that affect that inalienable right of freedom, rather than only the conventional and original aspects of security, which revolved around the legitimacy of the states use of force. However, this does not imply that the conventional aspect of security is obsolete; states still need to protect their citizens from the possibility of external aggression, as well as domestic unrest; and the state still needs to police. In this regard, the state needs intelligence agencies and spooks which provide an assessment of the threat, its source, and the possible forms the threat(s) might take; it needs a military and a police force to possess the ability of ensuring security. The functioning of intelligence agencies, both domestically and across borders will remain cloaked in secrecy and, so long as their functioning focuses on the real threat(s), the secrecy is justifiable. Unfortunately, in countries like ours in particular, and even in some developed countries, some political leaders have misused these agencies to further their personal ends. Nonetheless, there is no denying the fact that these agencies have a vitally important role to play in ensuring the security of its citizens. The vital question that actually arises is in the distribution of resources and the priority accorded to the various forms of security that a state must provide to its citizens. There is no doubt that militaries are economic parasites: their maintenance costs the nation an enormous sum and they do not, generally speaking, contribute to the growth of the economy. Let me clarify here that I am not referring to the Pakistan militarys corporate interests, which some individuals in uniform might argue have contributed to the economy, while civilians, like Ayesha Siddiqa Agha, might argue are even more parasitic. Particular to a country like ours, where a sizeable military is being maintained, which consumes a sizeable portion of the annual budget, the political debate must surely focus on what a population groaning under the burden of inflation, increasing prices, and unemployment should put first: a comprehensive poverty alleviation programme or our requirements for effective defence. Where should the balance be drawn? There are no easy answers, only questions. Nevertheless, this subject deserves a comprehensive political debate. In earlier articles, I have suggested the restructuring of our military system to make it more economically viable and efficient, but even that alone may not suffice. It has been argued that if our economy booms, the slice of the cake that goes to defence becomes smaller; 53

but

that

is

not

happening.

Our citizens are in desperate need of security, but which one before the other? The author is a retired brigadier. He is also former vice president and founder of the Islamabad Policy Research Institute (IPRI)

The Pakistan Poverty Alleviation Fund (PPAF) represents an innovative model of public private partnership. Incorporated under section 42 of the companies act 1984 it follows the regulatory requirements of the Securities and Exchange Commission of Pakistan. Sponsored by the Government of Pakistan and funded by the World Bank and other leading donors the PPAF has on June 26, 2008 a resource base of US$ 1,030.17 million (Rs. 61,810.2 million). As the lead Apex institution of the country wholesaling funds to civil society organizations, the PPAF forms partnerships on the basis of rigorous criteria. Before finalizing partnerships the PPAF ensures that the partners have well targeted community outreach programs that are committed to enhancing the economic welfare and income of the disadvantaged peoples. The TARGET POPULATION for the project are poor rural and urban communities, with specific emphasis being placed on gender and empowerment of women. Benefits accrue directly to the vulnerable through income generation, improved physical and social infrastructure, and training and skill development support. There are several UNIQUE FEATURES of the PPAF, the three most significant features are:

The establishment of an indigenous autonomous Apex institution with resource backed capability of providing financial and non-financial support to civil society organizations on a long-term basis. A model public/private sector partnership with the role of government as an enabling facilitator, and predominant role of private sector professionals for policy, strategy, and management. A dedicated market developer committed to the emergence of professional and sustainable civil society organizations.

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SURVEY ANALYSIS

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6.1 CONCLUSION:The government has prepared a broad-based strategy for addressing poverty, including accelerated human development, better governance and reduced vulnerability. The strategy correctly emphasizes promoting growth as the main vehicle for poverty reduction. The expenditure frameworks embodied in the PRSP are ambitious but achievable with the continuation of reforms and the absence of major adverse political and security shocks. The projections present a promising start in aligning government resources t o address the challenges ahead. Looking ahead, a key challenge will be to effectively manage the implementations of the strategys ambitious and diverse policy agenda.

The PRSP indicates that work remains to be done in the key areas of developing consistent baselines and targets for many indicators related to the Millennium development goals, for instance, enrollments, infant and child mortality and proportion of fully immunized children.

The PRSP also reports encouraging progress in the planning and implementing a modified CWIQ survey to track the targets. The first full survey is planned in March 2005.

The effectiveness of the monitoring system and its impact on the policy process critically depends on the institutional arrangements and the capacity of these institutions. The sustainability of the monitoring system and the questionnaire will depend critically on the technical and financial capacity of the FBS to effectively conduct these complex surveys.

Since the IRSP the government has made significant progress in implementing its devolution plan. Political devolution has been completed and local governments are now headed by elected officials. A good start has been made on establishing mechanisms fro effective fiscal devolution.

However many challenges remain to ensure that devolution will yield the expected improvement in access to an quality service delivery. It is encouraging to see that he PRSP includes a clear 56

commitment to transfer an increased share of the fiscal space generated at the federal level to provincial governments. Hopefully theses provincial governments will pass on the additional transfers are to lower levels of the government. The provincial and local governments no have an increased responsibility for achievement of the poverty reduction goals.

The government has made significant reforms in the financial sector. The privatization of many of the national banks is a good sign for the future. As these institutions develop further it would be important to discontinue government financing for these purposes.

The strategy on education is well articulated with clear recognition of core issues such as, the need for increased investment, appropriate linkages with the Millennium development goals and focusing on gender disparities. However progress towards education targets such as the Education for all, will require improvements in efficiency and quality of spending.

The broad strategic direction and goals in the health and population appears appropriate. The PRSP recognizes the need to increase financing and spending. Resources are to be doubled over the next three years. The strategy rightly prioritizes the control of diseases especially TB, HIV/AIDS, Hepatitis B and malaria.

6.2 RECOMMENDATIONS:This strategy is logical and broad but to some extent lacks specify. There are many challenges that remain and these form an outline for future work.

The following can be recommended:

i)

To include an explicit and prioritized road map of reforms and policy actions with a clear timeline, especially in priority areas such as power and rural development and including priorities foor donor contribution.

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ii)

Up-dating the framework for low-case growth (as mentioned earlier as a risk) and incorporating other key risks and implications for poverty

iii) iv)

Addressing the critical problems of governance, especially in the area of devolution To implement core welfare indicators questionnaire survey and to broader finalize arrangements for monitoring and providing timely feedbacks into the policy process.

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