ISLAMABAD: The overall vision of Poverty Reduction Strategy Paper (PRSP-II) is to steer Pakistan's economic growth back to the range of 5-7 percent per year by stimulating growth in the production sector; creating adequate employment opportunities; improving income distribution; and harnessing the country's economic competitiveness through economic liberalization, deregulation and transparent privatization.
"The strategy recognizes that to steer Pakistan back on a path of
broad-based growth, create jobs, and reduce poverty, a prolonged period of macroeconomic stability, financial discipline and sound policies is required", World Banks's Country Partnership Strategy (CPS) 2010-2013 report, released here said.
According to the World Bank report on Pakistan, during the previous Country Assistance Strategy (CAS) period strong growth and rapid poverty reduction through 2007 stalled as the economy faced crisis in 2008.
The report said that an ambitious reform program of the government elected in 2008 has reduced the fiscal and, in particular, the external current account deficit, increased GDP growth, restored foreign exchange reserves, and reduced inflation.
The World Bank CPS report said that the reforms have also resulted in a significant increase in power tariffs along with an automatic pass through of international fuel prices.
"The government still has more work to do in a difficult security environment to further reduce inflation and the fiscal deficit, particularly to eliminate the large losses of public sector entities in the power, transport and manufacturing industries, and increase public revenues through the introduction of a value added tax and better tax administration", the report added.
It said that the country's top leadership is cognizant of this and is committed to continue spearheading reforms in these areas.
The WB CPS said that Government's strategy focuses on regaining macroeconomic stability after the economic crisis and on structural reforms required to support the recovery of strong and sustainable growth.
It said that lessons learned from the previous CAS, the CPS reflects lessons learned from the Bank's past engagement in Pakistan.
In particular, the need to adapt to a rapidly changing political and security environment during implementation of the FY06-09 CAS highlights the need for flexibility.
In addition, the proposed CPS will focus more on the longstanding structural problems (like tax revenue mobilization and power) that contributed to the rapid erosion in growth and stability during 2007 and 2008.
Reflecting the need for greater realism, the proposed CPS outlines a less ambitious priority IBRD/IDA lending program while leaving open the possibility of doing more should conditions permit. Finally, given Pakistan's unique development and geopolitical challenges, enhanced partnership arrangements are critical.
The World Bank said that it CPS seeks to support Pakistan to address some of the major institutional, policy and financing constraints on its capacity to achieve and sustain high economic growth rates, to manage conflict and to improve the social indicators and capacity of its population.
The Report said that the World Bank Group's support to Pakistan will be organized around four pillars: improving economic governance,improving human development and social protection,improving infrastructure to support growth and improving security and reducing the risk of conflict.
The World Bank,s CPS said that addressing the shortcomings of Pakistan's economic management is critical not only for restoring macroeconomic stability but also for reducing the likelihood of reversals leading to another cycle of growth giving way to stagnation.
Enhancing domestic revenue mobilization will be the urgent priority during the CPS period.
Strengthening public expenditure management at all levels of government will complement this focus.
The strategy also focuses on governance of markets with a view to strengthening Pakistan's competitiveness by addressing barriers to competition, and factor market rigidities (including constraints in access to finance).
The World Bank will support improvements in the legal and policy framework for growth through analytical work and policy-based lending.
Through Analytical and Advisory Activities (AAA) and policy dialogue the Bank will support increased efficiency, competition and broadening of financial markets as well as improvements in financial infrastructure.
An integral part of IFC's strategy in Pakistan is to increase access to finance to underserved groups, especially micro, small, and medium enterprises (MSMEs) by strengthening financial intermediation and business management and corporate governance practices at enterprise level, the bank report added.
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