Pakistani groups walk out from World Bank “consultation”

5 April 2001

Press Release/For information of partners, May 17

Civil society represented by NGOs, CBOs and individual academics, professionals and university students, walked out from what the World Bank’s so-called ‘public consultation’ on its Country Assistance Strategy held at NIPA, Karachi this morning (May 17th, 2001). The World Bank claimed it had been consulting with NGOs and civil society since October 2000 but failed to identify them, nor had participants received any information of any such meetings having taken place. Nor had World Bank involved the media to enable a nation-wide debate at every level of society.

Civil society participants pointed out that a genuine public consultation had to start with a public debate for the purpose of setting out an agenda and priorities after assessing World Bank’s track record, and not to rubber-stamp pre-planned programmes. After registering their objections verbally and in writing (full statement appended below) and a show of banners, they staged a walkout.

The 24 NGOs and CBOs represented were :-

Orangi Pilot Project-RTI; Shirkat Gah; Urban Resource Centre (URC); Pakistan Institute of Labour Economics (PILER); ); Roots for Equity; Muttahida Lease Committee; Orangi Pilot Project-OCT; CARITAS Pakistan; Idara Samaji Falah-o-Behbood; United Welfare Association; Mustafa Lease Committee Awami Colony; ASRA Karachi; CSS; CREED Alliance; Young Professional Training Unit; Bright Education Society; Aurat Foundation; Markazi Rabta Council; Ghaziabad Falahi Committee; Awami Jad-o-Jehad; Gulshan-e-Bihar Welfare Society; Women’s Action Forum; Action Committee for Civic Issues; Idara Amn-o-Insaf.

– From Najma Sadeque, Karachi, Pakistan

The World Bank in Pakistan Public Consultation on a Country Assistance Strategy Karachi

Citizens Concerns and Comments

We met (earlier) to discuss the consultations and the agenda. We appreciate the fact that the Bank has initiated this dialogue. We want it to be meaningful. Given the state of Pakistan’s development process and economy this dialogue is important. However, we feel that three important issues need to be discussed before anything else if the consultations have to address the real problems that the loan-supported programmes face. These issues are:

1. A large number of Bank supported projects and programmes have been failures according to professionals who have evaluated them, Bank monitoring reports, NGOs who have been associated with them and beneficiary organisations. The press has reported this in some detail. It is necessary to review this project and identify the causes of their failures so that they can be addressed. We are concerned that the Bank wishes to build on these failures.

2. Many NGOs, professionals and journalists have questioned Bank procedures especially related to the hiring of foreign consultants when local expertise is available; international tendering where local construction firms are capable of delivering; and Bank procurement procedures. These stifle professional and entrepreneurial development in Pakistan and increase costs by many hundred per cent.

3. The nature and content of the consultations has to be meaningful. This it can only be if the various partners in the consultation collectively decide on the principles, procedures and process of consultation. This will result in the NGOs, citizens and CBOs owning the results of the consultation.

Citizens Comments on the World Bank’s ‘Public Consultation

on a Country Assistance Strategy (CAS)’ document

The last CAS of the World Bank was produced in 1995, with the next CAS being proposed for 2002-04. While the attempt to seek public participation and comments on the proposed CAS is a welcome departure from past practice, any such discussion must first thoroughly discuss the earlier CAS and the consequences that have resulted over the last six years. Any meaningful discussion on any future strategy must take cognizance of past priorities, successes and failures. The circulated document for the May 17 meeting does talk about some of the World Bank’s strategies in the past, as well as specific sectoral and project-related initiatives, yet, this is bound to be a very short list of all the initiatives taken and interventions made by the Bank. Moreover, the document is a highly biased document showing all the World Bank’s initiatives in a highly positive light. There seems to be no, or little, mention of any failures and of learning by doing.

We propose that if the World Bank is serious about formulating and discussing future strategy, a thorough and frank discussion of past policies and strategy will have to be undertaken with representatives of civil society, prior to formulating new initiatives.

Some comments on the circulated document and on the proposed strategies:

Two assertions made early on in the document need to be challenged. The document states that the ‘World Bank helps countries increase economic growth, fight corruption’. In the context of Pakistan, past experience suggests that this is not the case. Much evidence by a host of scholars and academics clearly suggests, that World Bank policies, along with those of the IMF which often works in tandem with the Bank, have been responsible for lowering the growth rate in Pakistan over the last decade. Policies which have promoted the privitisation and downsizing of the public sector, those which have been responsible for freeing prices moving them towards the ‘market price’, the elimination of subsidies in key markets, regressive taxation measures in order to raise revenue, and a reduction of tariffs seriously affecting local industry, are just a small sample of the policies of liberalisation, getting-prices-right, and a move towards more ‘openness’, which have had an impact on lowering the growth rate.

While the World Bank may have found the need to be more vigilant on corruption, within a host country more generally, as well as with regard to donor and/or World Bank funds, evidence from Pakistan suggests that the Bank has preferred to continue its dealings with the government, despite ample proof that the government has been involved in high degrees of corruption, and that there has been misuse and embezzlement of Bank funds, such as in the case of the Social Action Programme. Rather than ‘fight’ corruption, the Bank has, in the past, turned a blind eye towards corruption preferring to work with corrupt officials and governments; it has been business as usual.

This document seems to suggest that it has been issues of misgovernance, corruption, political instability, and a deterioration in government institutions, which has had a severe impact on poverty and are explanations of why growth has fallen and been low. While these factors may have added to the worsening of an already deteriorating situation, much research shows that the economic reforms undertaken under the guise of structural adjustment since 1988, with the assistance of the Bank and the Fund, may actually be the real cause for growing poverty and worsening economic growth. Hence, statements like ‘reducing poverty in Pakistan will require faster economic growth’ or ‘the World Bank has been actively supporting Government in trying to stimulate economic growth and set in place policies and activities that will help reduce poverty’, sound hollow in light of continuing economic adjustment programmes. As the last decade has shown, and as recent figures continue to show, economic growth is unlikely to rise to any appreciable level necessary to reduce poverty.

As is by now well known, the reduction in the fiscal deficit is a key requirement of agreements with the IMF and the World Bank which lead to loans and assistance. The document considers a reduction in the fiscal deficit by the Government of Pakistan to be one of the few successes it has achieved. However, while the lowering of the fiscal deficit may be considered by the Bank to be a success in terms of one of the objectives of the adjustment programme/loans, the consequences of this reduction have been rather severe. Perhaps the biggest casualty in trying to lower the deficit, has been the huge reduction in the public sector development programme, which has been brought down from 7 percent of GDP in the early 1990s, to less than 3 percent today. Not only has this resulted in lowering government development expenditure, but due to its numerous crowding-in impacts, has also resulted in lowering private investment as well. Many of the problems, of low growth and of increasing poverty, are to be explained over the last decade by this huge reduction in development expenditure.

The World Bank proposed Country Assistance Strategy for Agriculture talks about improving agricultural productivity for ‘the majority of farmers’ and hopes to improve ‘the quality of life for the rural poor’. Without giving due cognizance to the nature of tenurial relations within agriculture and the great diversity which exists in terms of land ownership, it is not possible to talk about either rural poverty or of the ‘majority’ of farmers. The reforms and strategy proposed in the document favour those with land and access to other critical inputs; it will not affect the rural poor and those who are socially and economically excluded, in any meaningful manner. The key constraint to agricultural growth and particularly of the rural poor, is a lack of access to land. Unless a reform policy assures land availability to the landless, any programme for the agricultural sector and for rural areas, will be ineffective.

The Banking and Financial sector reforms envisaged, which include an attempt to ‘phase out directed and concessional programs to promote market integration’, are a step in the wrong direction. At a time when there is low investment and even lower growth in the economy, carefully focussed and directed concessional programmes – for exports, the small and medium sized enterprises, agriculture at a time of drought, for example – are required, rather than the discipline of the market. Evidence from other successful developing countries and from Pakistan in the past supports the claim that there is a need for directed credit. Also, an already low savings rate is unlikely to get a boost if the proposal to ‘integrate’ the National Savings Scheme with the financial sector goes ahead, as the rate of return on such market determined rates in a time of recession and poor economic and financial activity, is likely to be lower than the existing government-administered rate.

The World Bank document reveals great enthusiasm for the local government devolution programme, despite the fact that many citizens’ groups have voiced great concern about the programme. It would be a little premature on the part of the World Bank to support and tie-in many of its proposed strategies at the current stage. Many core issues of the devolution plan, not least the issue of finances and of actual implementation, are ill-defined. Moreover, the relationship between line agencies and provincial governments and the efficacy of the local government system under a promised democratic set-up, still need to be adequately worked out. Less enthusiasm and more caution are well advised at this stage.

The Energy programme talks about ‘liberalization of markets’, which is another name for price increases, to which we have already been witness. The policy of allowing utility prices to find their own price (as opposed to being administered by government) is not a pro-poor measure and is likely to add on to the heavy burden on the majority of the populace. Not only is such policy not welcome at most times, further imposition at a time of slow growth, recession, and growing unemployment and poverty, is a particularly painful blow. One fails to comprehend how the World Bank’s Strategy to ‘help alleviate poverty by improving access to electricity and other clean fuels in rural areas’ will materialise at a time when electricity charges are going up and rural poverty, as the document recognises, is increasing.

The Education, and Health and Nutrition programmes proposed mention ‘very low government expenditure on health services’, but this needs to be seen in light of key policy objectives to reduce the deficit, as mentioned above. It is improbable that health and education spending by government will increase at a time when reducing the fiscal target seems to be condition/priority number one. Moreover, the repeated references to the Social Action Programme seem a little ironic, as this is the one high-profile programme of the Government of Pakistan, ably supported by a number of donors including the World Bank, which has proven to be a great disappointment, if not outright failure. Moreover, the existence of considerable corruption under the Programme has been well documented and claims to its existence have not been denied.

What this brief response and analysis of the World Bank’s ‘Public Consultation on a Country Assistance Strategy’ document suggests, is that the people of Pakistan are to get no respite from either low growth or increasing poverty. Not only does the World Bank’s proposed strategy ignore key contradictions within the programmes, but its implementation is going to make things far worse. To add insult to injury, the Government of Pakistan, or more precisely, the people of Pakistan, will end-up paying for the loans which are made available to implement these detrimental policies.