Focus on poverty

The meeting of the Pakistan Development Forum (PDF), formerly Aid-to-Pakistan Consortium, is an important annual event, ahead of the federal budget, to provide an opportunity to the government to brief foreign diplomats, trading partners and lenders on the country's economic situation and funding requirements. Speaking at the inaugural session of the two-day PDF, Prime Minister Shaukat Aziz said that sustained upward trajectory of Pakistan's economy will offer vast opportunities for upgrading economic, trade and commercial co-operation with other countries of the world and asked the development partners to fund country's programmes relating to poverty reduction etc.
The Prime Minister's address was followed by speeches from some distinguished economists from the multilateral and bilateral institutions who concentrated on various aspects of the economy.
While all other participants were somewhat cautious in their comments, the Dutch ambassador representing the European Union minced no words in warning the government that poverty was on the rise in Pakistan and a well thought-out action plan should be put in place as soon as possible in this key area. According to him, the medium-term development framework (MTDF) does not sufficiently address the risk of growing inequality and past experience has shown that macro-economic growth by itself did not necessarily lead to poverty reduction.
Therefore, more targeted, multifarious interventions were needed to allow the poor to participate in and thereby help sustain growth. The allocation of resources within the budget should reflect the poverty reduction and social uplift agenda of the government. Pakistan was advised to take forward commitments, targets and planning processes of the PRSP and align the framework of MTDF with PRSP.
The ambassador was of the view that MTDF did not have a proper monitoring and evaluation framework and the EU is equipped to offer assistance to the government to establish an independent national statistical system in line with international practices. The EU shared the government's view that employment generation was one of the key approaches towards poverty reduction. The informal sector that employs nearly 70 percent of non-agricultural workforce and is particularly relevant for employment of women was not addressed in the MTDF.
The ambassador's speech, in our view, is noteworthy because of its unusual frankness in spotlighting weak spots of Pakistan's development effort. It is true that the country has made substantial progress so far as macro-economic indicators are concerned and the economic managers miss no opportunity to propagate various achievements, but the gains of macro-economic performance have not trickled down to the lower strata of society.
In fact, though reliable data are not available, there are some indications that both poverty and inequality in income distribution have increased during the past few years.
The government has, on the other hand, been defending its position by citing some selected statistics and policies to show that it is moving in the right direction. Initiatives like abnormal emphasis on SMEs and enhanced support prices for farmers enabling them to earn billions of rupees over and above what would have been otherwise possible, are generally quoted to show the concern of the government for poverty reduction. Some of the government's arguments are, nonetheless, not very convincing.
SMEs have, for example, not made much progress for some understandable reasons and billions of rupees going to the agricultural sector do not reach the targeted groups. The poor people, particularly in the rural areas, remain as deprived as before. It would not be very useful to enter into a debate, but it is quite evident that the government, as emphasised by the EU, needs to do much more in the areas of poverty alleviation and employment generation. To be more specific, the commitments in the PRSP and MDG targets would not be met unless the government intervenes effectively to redistribute income and assets from the rich to the poor in a fair manner.
Of course, we are not talking about equality in incomes but initiating policies, which could promote employment and at least ensure the provision of basic needs to all the people of the country.
The argument that such a policy framework would not be consistent with the principles of free market economy is not tenable. In fact, most of the free market economies have devised appropriate methods to promote welfare of the downtrodden through progressive tax regimes, stringent regulatory frameworks to check monopolies and exploitation and direct intervention to help the disadvantaged groups of society.
Pakistan can also follow their example. There is no reason why government bodies like Monopoly Control Authority cannot be made effective and the tax net widened to include agriculturists and the informal sector. The government has itself recognised that the recent rise in sugar prices was due to the existence of a 'cartel' in the industry.
In order to assess the impact of its policies, the government also needs to put in place a proper national statistical system. The offer of the EU for organising such a system is timely and must be availed of by the government to remove misapprehensions about the quality of data emanating from various sources.
We, however, feel that the Dutch ambassador has probably exceeded, the established norms in the diplomatic community by commenting on issues like the decision to reduce the number of local government seats, status of women, Hudood Ordinance and blasphemy laws etc.
Though his proposals on these issues seem to be quite appropriate, it may well be interpreted as a clear case of interference in the internal affairs of the country and make the task of the government to rationalise these laws more difficult. It would have been much better to express concern on these matters in closed-door meetings rather than in open fora.