The European Union on Monday cautioned that poverty was on the rise in Pakistan, and suggested that the government should put in place a well thought out action plan for improvement in this key area. The caution came from Netherlands'' Ambassador here during discussion at the middle session of Pakistan Development Forum (PDF) 2005. The ambassador said that he was giving the statement on behalf of EU member states. He said the EU was concerned that MTDF does not sufficiently address the risk of growing inequality, and added that the past experiences had shown that macro-economic growth by itself did not necessarily lead to reduction in poverty.
The ambassador noted that enhanced and more targeted interventions were needed to allow the poor to participate in, and thereby help sustain, economic growth. He said that allocation of resources within the government''s regular budget needed to reflect the poverty reduction and social agenda, even in a low growth scenario.
He said that EU firmly believes that a stronger national planning process was needed to achieve the aspirations of the MTDF. He sought more clarity on the relationship between the PRSP and MTDF, and asked for further alignment of these two frameworks. He demanded that Pakistan should take forward commitments, targets and good-practice planning processes of the PRSP and extend them to all sectors of the MTDF.
He was of the view that the MTDF did not have an overall monitoring and evaluation framework, which would be essential for its success. He added that reliable and gender disaggregated data was required for effective planning and implementation. He referred to various official reports that depict rosy picture of various key sectors of Pakistan but disagreed with these views. He claimed that the current facilities and mechanisms in Pakistan for the collection, processing and distribution of data were not sufficient to meet the government''s needs at federal, provincial and district levels. He said the EU offers assistance to the government to establish an independent national statistical system in line with international practices.
He said transparency and accountability of government interventions remain crucial. Deregulation, public scrutiny, law enforcement and other effective measures must be intensified to prevent corruption. In addition, timely meeting of international contractual obligations and the adequate utilisation of funds for the purposes agreed would contribute to a reliable business climate. It is not clear how pillar II of the PRSP (improving governance and devolution) was adopted by the MTDF. He wanted clarifications in this regard.
According to the ambassador, the EU was concerned over increasing poverty, especially in rural areas, and said that EU shares the government of Pakistan''s view that employment generation is one of the key approaches towards poverty reduction. He demanded that actions and programmes on employment generation in the MTDF should be enhanced.
He said: "We urge the GoP to focus on sectors where maximum employment generation can be obtained, especially for the poor, including women. The rural development and agriculture sectors should be mentioned for the potential to absorb labour, as must the small and medium enterprises sector.
"However, the ''informal sector'' which employs up to 70 percent of non-agricultural work force and is particularly relevant for employment of women, is not addressed in the MTDF. The government is not, and should not be, the primary provider of jobs, but it should provide an enabling environment for private sector development, including access to micro-credit schemes, and it should facilitate regional trade links".
Talking on gender issue the ambassador said: "The EU wishes to express its very serious concern about the position of women. We urge the GoP to do everything in its power to improve the situation of women in Pakistani society. In this context the EU urgently calls for the repeal of the discriminatory stipulations of the Hudood Ordinance, blasphemy and qisas and diyat laws."
He welcomed Pakistan''s ongoing gender responsive budgeting pilot, and demanded that it should become a standard planning principle in the MTDF and be applied to all MTDF actions and programmes. "We support strange and independent leadership of the National Commission on the Status of Women, and increasing the capacity of the Ministry of Women Development."
The ambassador was critical of recent government decision of reducing number of local governments. He said: "We fear that the recent decision to reduce the number of local government seats, may lead to a net reduction in the representation of women, poor and other vulnerable groups and minorities in local level bodies."
On the issue of governance and devolution, he said the EU welcomes proposals, concerning the legal reform process. He hoped that these proposals would be discussed and approved in parliament, provinces, local governments and with civil society. He added that EU noted slow pace of reforms in the legal system, the judiciary system and in the law enforcement system, and urged for full implementation of the reform processes for democratic and sustainable development of Pakistan.
The ambassador said EU encourages the GoP to develop and share a time-bound action plan to complete devolution by implementing envisioned framework in its entirety, notable with respect to clarity on roles and responsibilities and ensuring that an appropriate functional and operational mechanisms was in place. He referred to fiscal decentralisation, federal to provincial and sub-provincial devolution.
Regarding human development, the ambassador said the EU welcomes Pakistan''s recently published millennium development goals report and ongoing initiatives to meet MDG targets. He said that meeting the millennium development goals (MDGs) would require a huge increase in efforts by the government. He proposed that the MDTF should include specific time-bound actions to achieve the major quantitative MDG targets, such as those related to education and health. Public sector development plan allocations and expenditures need to be raised in order to meet MDGs and ensure the quality of social service.
He added that government was responsible for the provision of quality education and health services to the people of Pakistan. He also highlighted the role of a regulated private sector in Pakistan. He said the EU would support the government in this endeavour. The ambassador called for institutionalised respect for human rights, the rights of the child and the equality of women and men through affirmative policies and regulations. The EU emphasises that respect for human rights as laid down in the Universal Declaration on Human Rights is an essential element for development.
He also urged for quality as well as quantity of education, and demanded that the government should include it in action plan as one of top priorities. He claimed that high dropout rate and very low school enrolment of girls in many areas have known causes. He said that non-availability of schools and/or teachers, large travel distances to school, hidden and transparent costs associated with schooling, and parental attitudes, were examples of reasons for ''dropout''.
He said that the MTDF needed to recognise these reasons and devise a strategy to address these reasons. He added that the EU welcomes the curriculum review that would take place as part of the mid-term review of the education policy, and the modernisation of the examination boards. He said that EU awaits with interest the outcome of the curriculum review at the provincial level. He urged the GoP that it should focus on technical education and vocational training systems. He said that technical education and vocational training systems were either non-existent in Pakistan or were excessively supply-driven. He desired clear responsibilities agreed between the involved ministries (Ministry of Labour, Ministry of Education, Ministry of Industries). He also suggested appropriate co-ordination mechanisms to ensure a critical mass of adequately prepared trainees, availability of additional funding, and lessons from previous donor-supported, failed efforts should be taken into account.
Regarding health services the ambassador said the EU welcomes Islamabad Declaration on maternal health and child survival issued at the recently concluded Public Health Forum. He added that the EU welcomes Pakistan''s commitment to tackle communicable diseases, including TB and malaria, and to improve water supplies and sanitation. However, he suggested for significant additional efforts to combat HIV and AIDS as a matter of extreme urgency. He desired that Pakistan should lead partners in a concerted and enhanced national response to prevent the spread of HIV infections, in line with commitments made at the Millennium Summit and elsewhere.
He appreciated the government of Pakistan for putting together a rich agenda for the PDF that allows very real issues retarding its development and the prospects for eradicating poverty, and mentioned medium-term development framework and PRSP.
He said the EU was encouraged by the generally positive macro-economic development in Pakistan and complimented it on successes to create favourable macro-economic conditions in the country over the past few years. He added that the MTDF provides a commendable framework to strengthen development of Pakistan.
IMF OFFICIAL POINTS OUT PROBLEMS FACING PAKISTAN''S ECONOMY: While lauding Pakistan for success of its economic policies and performance, IMF executive Mohsin S Khan, Director, Middle East and Central Asia Department, has listed several challenges to the continuing growth, and how to meet them. Among these are: reduction of poverty to 13 percent by 2015; containing inflation by further tightening of monetary policy; maintaining a fine balance between reduction of debt burden and increasing social spending; improving revenue-GDP ratio by taxing agriculture and services sectors; and maintaining budget deficit at 3 percent.
He was addressing the inaugural session of Pakistan Development Forum here on Monday. He observed that Pakistan Millennium Development Goal to reduce poverty to 13 percent by 2015 was "ambitious, but feasible". This, he added, would require continuation of policies for accelerated growth and strengthening of business environment.
The IMF executive called for further tightening of monetary policy, "lest harsh measures become inevitable later", hurting Pakistan''s competitiveness.
With regard to fiscal policy, he counselled need for maintaining balance between reducing debt burden and increasing social spending. According to him, public and private debt burdens are already quite high.
Mohsin stressed the need for not exceeding the budget deficit to go over 3 percent in the coming years to meet the public debt-to-GDP ratio to about 50 percent by 2008-09.
He called for raising the share of tax revenues in GDP, as the present level of 11 percent is inadequate. "We encourage the government to set more ambitious revenue goals. For this, the government needs to do more in the agricultural and services sectors rather than reducing too much the tax rate for the manufacturing sector in the hope of boosting growth."
He said that petroleum levies should be returned to the earlier levels, as subsidising petroleum prices is economically inefficient and socially ill-targeted.
Another prescription of IMF executive---repeatedly pressed by donors---is to reduce drain on the budget by transfers to various state-owned entities. The most prominent are the in the power sector, which amount to nearly 1.5 percent of GDP.
While he noted that sale of the power entities was on the cards, a new regime for electricity tariffs and subsidies has yet to come into effect.
He said that last but not the least Pakistan needs to complete the second-generation structural reforms agenda to create an environment in which private initiatives can flourish.
He said that supervision and regulation of stock market needs to be strengthened further to reduce the possibility of the type of bubble and subsequent correction that occurred recently.
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