Pakistans I-PRSP

in the Light of Evaluative Experience

of the World Banks Poverty Reduction
Strategy and the Global Experience with
the PRSPs so far
Sohail Jehangir Malik
Chairman
Innovative Development Strategies (Pvt.)
Ltd

Global Poverty Reduction during
the 1990s
The World Banks three pronged poverty
reduction strategy of 1990
Growth
social sector development
and safety nets
had mixed results
In terms of the money-metric measure of
poverty
By the end of the 1990s Global poverty rates
were down but progress was extremely
uneven
Take away China and there was
actually a worsening of poverty
headcount numbers over the
1990s!!!
Reduction in child malnutrition has been slow
prospect of reaching the targets of Millennium
Development Goal is in doubt
120 million primary-school-age children were not in school in 1999.
53 % of them girls.
74 % living in South Asia and Sub-Saharan Africa.

Ratio of girls to boys in primary and
secondary school (%)
Infant mortality rates
Pakistan - by the end of the 1990s

Not only was the poverty
situation alarming!
but prospects for its reduction
were also bleak
y = 38.68e
-0.0316x
10
15
20
25
30
35
40
1
9
9
0
1
9
9
2
1
9
9
4
1
9
9
6
1
9
9
8
2
0
0
0
2
0
0
2
2
0
0
4
2
0
0
6
2
0
0
8
2
0
1
0
2
0
1
2
2
0
1
4
Expon. (Actual)
Expon. (Required)
Headcount Of Poor - Pakistan
Pakistan: Prevalence of Child malnutrition (number of
children under five)
38.2
40.2
y = 40.612e
-0.0102x
y = 43.145e
-0.029x
0
20
40
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Expon. (Past Trend)
Expon. (Required Trend)
Pakistan: Ratio of Literate Females to Males (% age 15-24)
58.9
49
53.7
57.9
y = 48.094e
0.0185x
y = 44.956e
0.0294x
40
55
70
85
100
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Expon. (Past Trend)
Expon. (Required trend)
Pakistan: Under Five Mortality Rate
110.3
138
118
112
y = 138.95e
-0.022x
y = 160.27e
-0.0451x
30
60
90
120
150
1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014
Expon. (Past trend)
Expon. (Required trend)
Details of the Poverty Trends in Pakistan
Province FY93 FY94 FY97 FY99
Urban Areas 20.7 16.3 16.1 22.4
Punjab 22.0 18.1 16.9 25.5
Sindh 17.3 11.8 12.0 16.1
NWFP 25.3 26.9 27.2 29.2
Balochistan 31.8 16.8 23.0 24.3
Rural Areas 28.9 34.7 30.7 36.3
Punjab 26.5 33.9 28.3 36.0
Sindh 29.5 31.8 19.6 34.7
NWFP 37.0 40.0 43.4 44.9
Balochistan 28.1 37.9 42.5 22.5
Overall 26.6 29.3 26.3 32.2
Punjab 25.2 29.5 25.0 33.0
Sindh 24.1 22.6 15.7 26.6
NWFP 35.5 38.1 41.2 42.6
Balochistan 28.6 35.5 38.4 22.8
Poverty Trends across Provinces
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
45.0
FY93 FY94 FY97 FY99
Pakistan Punjab Sindh NWFP Balochistan
Poverty Diagnostics
Poverty is strongly related to lack of basic needs
Poor have low access to health related
infrastructure
Poor communities have lower access to health
facilities and immunization coverage
Poor have higher dependency ratios
More than 1/3
rd
of the poor households are headed
by aged persons

Poverty Diagnostics (contd.)

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

Investment as % of GDP
Consolidated Public Expenditures
(as % of GDP)
The Poverty Reduction Strategy
Papers
Born in late 1999 out of the pressures from:
HIPC
The lessons from the experience with the
World Banks 1990 strategy of Poverty
Reduction
The Recommendations of the Meltzer
Commission Report to the American
Congress

The PRSPs are an essential
requirement for debt relief under
the HIPC initiative and good
business plan for concessional
assistance under IDA
The PRSP requires:
A long term domestically owned holistic Vision
with a strategic articulation of the perceptions of
poverty and how to address these encapsulated in
a three year plan
Clear and Verifiable time-bound M& E Indicators
A participatory consultative process at the grass
roots level
Coordination and Efficiency through a Medium
Term Budgetary Framework
PRSPs ensure IFI partnership as well as means to
monitor domestic performance
Lessons from the WB Experience -
Policies
A strategy that emphasizes the mutually
reinforcing benefits of growth and human resource
development is relevant.
Most recent empirical evidence however, points to
the importance of contingent factors such as:
property rights,
a capable bureaucracy and
the distribution of assets in mediating the poverty
reducing effects of growth, and to the negative effects
of corruption on both inequality and poverty.
Lessons from the WB Experience -
Policies
Human development has proven to be vital for
long-term growth. However:
Need to improve the interaction between policies that
sustain long-term growth,
Need to improve the distribution as well as the stock of
human capital,
Need to curb corruption and enhance the social and
physical capital of the poor, that are likely to make the
real difference.
These are all elements making up the new
Comprehensive Development Framework
underpinning the PRSP process.
Lessons from Country Studies
Growth that is based on rural development has a notable
impact on overall levels of poverty.
Lack of social consensus and government commitment can
be a major obstacle to reform, while weak institutional
capacity can hinder prospects for implementation of an
effective country poverty strategy.
Slow private sector development, weak governance and
high aid-dependence slow down the prospects for growth
and reduce the long-term sustainability of growth and
improvements in the social sectors.
There is a need to monitor not only the level, but also the
depth and severity of poverty. Safety nets are a necessary
condition for ensuring that the poor are protected. All three
elements of the 1990 strategy are important for sustained
poverty reduction.

Lessons from Project Experience
Reaching the poor and making tangible
differences to their well-being depends on
a good project design
macro institutional environment
specific local institutional capabilities
cultural acceptability of different types of interventions.
Tightly targeted projects with good
communication, supervision and in-built
flexibility can work, even in difficult
institutional/policy environments.
Lessons from Project Experience
(contd.)
There is no reason to expect that the benefits
from social funds and decentralization will
always be pro-poor.
There is a need to better understand the
synergy between key areas of public and
private actions to better address the priority
needs of the chronically poor.
Core Principles of Pakistans
I-PRSP
Engendering growth
Governance reforms
Creating income generating opportunities
Improving human development
Reducing vulnerability to shocks


Economic
Reforms
Physical Asseet
Creation for
The Poor
Social Asset
Creation for
The Poor
Social Safety
Net

Governance
Private
Development
Public
Expenditure
Rationalization

Tax Reforms
Khushal
Pakistan
Programme

State Land
Allocation
Zakat & Ushr
Rehabilitation
Grant
Micro Credit
PPAF
Khushali Bank
Poverty &
Environment
Social sector
Programme
Education
Health
Population
Welfare
Water Supply
Nutrition

Gender Related
Reforms
Poor Women &
Children
Social Welfare
Programme
Zakat, Ushr &
Baitul Mal
Systems
Food Support
Programme
The Social
Protection
System
Pension Plan
Social Security
System
Indigenous
Philanthropy
Judiciary
Reforms
Public
Sector
Efficiency
Corporate
Governance
Rule of Law
For Society
Rapid
Economic
Growth
Utilization of
Assets
Labour
Market
Mobility
Extreme Poverty
Elimination
Creation of
Employment
Income of Poor
Poverty Reduction Strategy 2001 2004.

Revenue and Expenditures
(1998-99 to 2000-01 actual)
(2001-02 to 2003-04 IPRSP)
-10
-5
0
5
10
15
20
25
30
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04
P
e
r
c
e
n
t
Budget balance Total revenue Development expenditure Total expenditure IPRSP expenditures
Trends in Crucial Growth Rates
(1998-99 to 2000-01 actual)
(2001-02 to 2003-04 IPRSP)
4.2
3.9
2.7
3.7
5.0
5.2
5.7
3.6
4.4
5.0 5.0 5.0
2.69 2.69
2.2
2.1
1.9
1.8
0
1
2
3
4
5
6
1998-99 1999-00 2000-01 2001-02 2002-03 2003-04
p
e
r
c
e
n
t
Real GDP growth Inflation Population growth
Trends in Poverty
(1992-93 to 1998-99 actual)
(2000-01 to 2003-04 IPRSP)
0.0
5.0
10.0
15.0
20.0
25.0
30.0
35.0
40.0
1992-93 1993-94 1996-97 1998-99 2000-01 2001-02 2002-03 2003-04
P
e
r
c
e
n
t
Overall Urban Areas Rural Areas
I-PRSP Challenges

extracting Pakistan from a debt trap,
accelerating growth,
improving social indicators, and
restoring the credibility and integrity of public
institutions.
Major I-PRSP Challenge
Macroeconomic stabilization:
Increasing tax revenue in order to provide more
fiscal space for poverty reduction initiatives
overcoming adverse debt dynamics.
Maintaining a prudent monetary policy in order
to keep inflation low
Increasing export growth to improve the
external debt situation.
Major I-PRSP Challenge
Growth promotion:
Acceleration of reforms in the areas of:
Privatization
Irrigation and drainage
Energy tariff rationalization
Karachi electric Supply Company
Gas pricing
Civil service reforms
Tax administration
Agriculture support services

The Bigger Challenge!

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

tackling the distribution issue

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

And the crucial assumption for
Poverty Reduction under the
I-PRSP
The success of the devolution plan in
improving access to education, health
and other public services
Major Strength of the I-PRSP
Confirms the governments commitment to
sustaining and expanding targeted
interventions that focus on disadvantaged
sections of society, especially in rural areas
Highlights the key role of agricultural sector
in poverty reduction

Weaknesses

I-PRSP does not question whether current
policies of poverty reduction are appropriate
or adequate, especially in the rural strategy.
It does not present an analysis of
alternatives
Weaknesses
The I-PRSP does not:
recognize the fact that greater tariff
adjustments will be required in the energy
sector in future and that tariff increases must
be accompanied by improvements in
operational performance.
acknowledge that privatization will take
time, and that in the interim pressing
investments will be needed.
Weaknesses

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

Challenges and Risks Outlined
by the I-PRSP
Challenges:
To raise financing, and
To improve governance and institutional capacity
Risks
Political opposition to reforms,
Lack of continuity,
Insufficient institutional capacity, and
Exogenous shocks

Common weaknesses in all
PRSPs
Inadequate information on the determinants of
pro-poor growth

Inadequate linkages between economic growth,
macroeconomic and structural policies and
poverty reduction

Inadequate linkages between public expenditures,
poverty outcomes, and costing.

Comparison of I-PRSPs and
PRSPs shows
significant differences between the full and
interim PRSPs in terms of :
data availability
quality of data analysis and policy
formulation
development of medium term budgeting
procedures
participatory processes
Pakistan has committed to
developing a FULL PRSP by
March 2003
This requires:
A wide ranging consultative process to ensure that
there is consensus on the long-term vision,
ownership and sustainability of the program
The long term vision requires consensus on the
perception of poverty and on the strategic
prioritization of interventions at all levels
The full PRSP requires:

Strategic coordination of resources -
including aid - over the medium term
Development of detailed Provincial and
sub-provincial level PRSPs
The full PRSP requires:
Expenditure tracking
To monitor spending in important sub-sectors and
programs
To track expenditure data by economic classification
Monitoring of intermediate and outcome
indicators
Adequate implementation of monitoring system.
And the building of technical capacity (at
provincial and district level)
Consensus on a nationally acceptable poverty line
The full PRSP requires:

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

The time is extremely short the
challenges are enormous!