Government to receive financial support to fight poverty

The Asian Development Bank (ADB) will step up its financial support to enable Pakistan to fight rising poverty, estimated to affect more than one-third of its population, a bank official told IRIN on Tuesday. "The bank will provide US $1.1 billion financing to the country in the current calendar year," said Naved Hamid, the bank's principal economic adviser, adding that the government would receive at least $800 million up to 2006. "The support is to achieve [economic] growth and poverty reduction," he noted. In a report released on Monday, the ADB said the poverty level in Pakistan in 1999 was estimated at an average 32.2 percent, with a significantly high incidence of 36.3 percent in rural areas, and 22.6 percent in urban areas. ADB based its estimate on data released in 1999 by the official Federal Bureau of Statistics. Based on different methodologies, other economists have estimated poverty at the slightly higher rate of 40 percent of the population of more than 140 million. Hamid said the ADB's emphasis in terms of projects, which it undertakes with the Pakistani government, was on rural development, because poverty was more widespread in the countryside. "Rural development will be a major focus, including rural infrastructure and generation of employment," he noted. The ADB has long supported the Pakistani government in a variety of areas and will continue to help in agro-based industry, small and medium businesses, and services sector, including health and education. "We are also supporting a rural finance strategy," Hamid added. He said the ADB wanted to see the role of the Agriculture Development Bank of Pakistan (ADBP) enhanced. The ADBP provides agriculture credits, mainly for crops, but the ADB wants the scope of these loans should also be expanded to embrace for agriculture-related industries and other businesses. President Pervez Musharraf has vowed to reform Pakistan's politics and economy. His economic team has also promised to fight poverty and increase the economic growth rate. However, an economic analyst, Nadeem Malik, told IRIN that the government would have to enhance social spending through the public sector development budget in order to fight the rising trend of poverty. "The public sector development spending is crucial," Malik said. "It needs to be enhanced so that employment opportunities are created." According to the ADB report, public sector development funding in Pakistan declined from 6.9 percent of gross domestic product in 1991 to 2.8 percent in 2001, thereby contributing to the rise of the poverty level. The major causes of poverty in Pakistan include lack of employment opportunities, a slowdown in the pace of economic growth in the 1990s, and a decline in public sector development programmes.