What is Pakistan Development Forum?
The Pakistan Development Forum (PDF), a multilateral consortium established by the World Bank to present various development projects, in Pakistan, to international lenders, was convened in Islamabad after 3 years on 14th-15th November. Delegations from 30 countries and 264 representatives from donor countries, five major lending and aid institutions participated in the meeting. US, United Kingdom and Japan confirmed minister-level participation while the International Monetary Fund, World Bank, Asian Development Bank and the Islamic Development Bank also attended the two-day meetings. The finance minister and special US envoy for Afghanistan and Pakistan Richard Holbrooke held a special session on protecting the poor and Special Assistant to Prime Minister on Social Sector Shahnaz Wazir Ali presented a social sector overview while Benazir Income Support Program Chairperson Farzana Raja briefed the meeting about the government social and income safe program.
Senator Syeda Sughra Hussain Imam discussed the situation on governance and the heads of the participating delegations gave their closing remarks on Monday in the closing session.
The Forum provided a platform for the donors to express their views and reservations over the handling of foreign aid and assistance. Most of the foreign participants underscored the need for structural taxation reforms in Pakistan and desired that the tax collection be more equitable and broad based to increase government revenues.
Outline of the Proceedings:
Provincial governments were unanimous in arguing that reforms would require huge sums of money ¶ something that a government already running a huge fiscal deficit would be unable to provide. The federal government as well as the provincial governments presented plans aimed at broadening the revenue base through aggressive taxation regime. In addition, the donor community urged the Pakistani Government to increase the Tax-to-GDP ratio and strongly emphasized on curtailing the subsidies on electricity, fuel, energy and other staple/commodities products. The donor organizations and nations also pressed the need for a strong monetary policy, in addition to a sturdy fiscal policy in order to address the problem of inflation and insufficient investment by the private sector.
Pakistan is suffering from very high inflation rates (estimated at 13%), that have dramatically reduced the purchasing power of its citizens over the last three years. The devastation of standing crops by the super flood has also pushed the prices up, causing as much as 48% increase in basic farm items such as vegetables, according to Pakistan renowned economist, Shahid Kardar during the PDF. These upward pressures on the policy rates have adversely affected the private sector by increasing the cost of borrowing, thus curtailing investment and economic activity.
Business and the private sector were a key theme during the PDF. A panel of private sector representatives made up of successful entrepreneurs and CEOs was organized in order to help discuss key long term development challenges that impede and or influence the growth of business, and thereby impact job creation and GDP growth. Panelists stressed the need for a flourishing private sector by encouraging entrepreneurship, promoting public-private partnerships and improving the business environment in the country. A fair degree of discussion took place around the restructuring and privatization of the public sector enterprises, which consume significant government revenues, given the inherent inefficiencies in their operations.
Government of Pakistan Stance on Aid Effectiveness:
One of the most important messages delivered by the government to the donors was how to effectively use the aid effectiveness. Government highlighted the record of poor donor alignment and harmonization in Pakistan, and suggested that the onus of responsibility for many areas of the Paris Declaration, an international agreement on joint progress toward enhanced Aid effectiveness, was on the donors. Donors agreed that they needed to perform better, but urged government to invest more heavily and more swiftly in key areas of reform, including anti-corruption, and public financial management.
During the aid effectiveness session of the conference it was requested that the donors sit down with the government representatives and identify their needs they would like to be met instead of generally talking transparency and accountability. A higher degree of trust in the government and the flow of aid through a central body would not only channelize the delivery of aid but also strengthen institutions and governance in the country. For the foreign aid to be spent effectively it is important for the donors to show more flexibility and align their interests with the interests of the government.
In the Prime Minister speech at the PDF, government countered a narrative of Pakistan, in which the country problems, which are common to the developing world, are spoken of in isolation ¶ without cognizance of the unique circumstances that Pakistan is faced with, specially after the Global War on Terror stared in Afghanistan in 2001.
What is Required from Pakistan?
In two words: Good-governance and transparency.
On these two critical issues, the donor community showed their reservations on the performance of the incumbent government and PM Gilani largely accepted the views held by the guests among the promises to do better. Pakistan present government certainly suffers from a terrible loss of credibility and the recent report by Transparency International noted that the performance of the government was sliding with lesser and lesser of State control on matters central to assuring good governance and transparency. Indeed that the Pakistani government faces grave problems and challenging conditions but its reform agenda must be followed through with a strong political and administrative resolve. Understandably, the objectives that the government plans to achieve are not impossible but a greater determination and enhanced coordination is needed among various state institutions.
Given the challenge that the Pakistani nation is faced with, it is the responsibility of the government to win the trust and confidence of the donor and international community so that the challenges or reconstruction and rehabilitation could be met.