The recent trip of World Bank's President to Pakistan has been significant in many ways. Apart from the highlighting of the World Bank's commitment on Baglihar dam issue, the visit was important for underlying the financial plans for the future and the perspective on the economy. Speaking at a news conference at the conclusion of his visit to Islamabad, James Wolfensohn pledged a $1 billion annual assistance for the next three years to Pakistan, but asked the government to pay greater attention to the alleviation of poverty which had increased during the last two years.
He repeatedly called for an improvement in the social sectors, including health care, education, roads and other services that are central to poverty reduction and a real test for the government. Pakistan, according to him, had a long way to go in terms of achieving its human development goals, and a renewed focus on better social service delivery and empowerment of women could contribute to the achievement of the millennium development goals.
Supporting small and medium-term enterprises, emphasis on rural development and provision of necessary infrastructure held the key to poverty reduction in the country.
Referring to the Prime Minister's vision for improvement in social sectors, and water and energy situation and initiation of second-generation reforms, Wolfensohn mentioned four areas where Pakistan was required to pay greater attention. Firstly, it was essential to rebuild investors' confidence by ensuring that the system was free from corruption and rules and procedures were not changed every now and then. Secondly, there was a need to develop infrastructure and energy sufficiency, including good transport system within big cities.
Thirdly, improvement of the telecommunication system and technology was crucial, and finally, education standards at universities had to be improved for advancement in research and to attract a large number of highly qualified Pakistanis living abroad. Pakistan's progress in the last few years had been terrific but it must stay the course until the benefits of achievements reach the vulnerable sections of the society.
It was also important to avoid the risk of complacency that usually sets in with success and the challenge now was to sustain reforms to accelerate growth and achieve millennium development goals.
The assurance by Wolfensohn that the World Bank would continue to provide financial assistance at a substantial scale in the near future is definitely welcome and shows his confidence in the country's potential for sustainable sound macro-economic policies over medium-term. A billion dollars a year is not a small amount by any standard, but the real contribution of the Bank's continued assistance would be in nudging the economic managers of the country towards making the right economic decisions and the confidence the Bank would inspire among foreign investors to view Pakistan in a favourable light.
All of this is likely to translate in improved growth rates and reduction of poverty and unemployment. It is also pretty clear the World Bank has the ability to foresee risks in the future that could harm the economy of the country. The Bank's advice on staying the course and avoiding complacency is of course timely.
As pointed out earlier by us in our editorial columns, many donors and analysts are now quite apprehensive about the continuity of reforms which were once considered as a very bright spot likely to speed up development process in Pakistan. The President of the World Bank also seemed to be thinking on these lines and it is time we paid heed to his observations.
The stress on poverty alleviation and improvement in social sectors was also equally important. Though exact data on poverty level is not available yet, most of the analysts believe that the recent increase in growth rates has not made a substantial dent on poverty and the capacity of the social sectors to deliver better services has not made any head-way.
This is particularly sad when more funds are being allocated for PSDP and other poverty alleviation measures after the country found more fiscal space to fund various projects in these areas. One reason for this disturbing situation, indirectly referred to by Wolfensohn, could well be the rising level of corruption which did not allow increased funding to have its full impact.
It was probably against this background that he called for reorganisation of government departments to eradicate corruption, which was still prevalent and could not be eliminated without transparency, judicial reforms, better education and devolution.
The most depressing aspect is that, of late, reports of increasing corruption at higher levels of government have started to reappear. This is of course strange when the government was consistently claiming to have eradicated corruption at these levels and was now widening its net to catch the corrupt elements at lower rungs of the bureaucracy.
We would urge the government to be extremely serious in dealing with this scourge and eradicate it completely without any fear and regard for political affiliations. Otherwise, there is every possibility that the present opportunity to alleviate poverty and improve social sector indicators because of higher fiscal space may be frittered away through corruption and lack of transparency.
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