The Failure of World Bank Projects in Pakistan

World Bank projects failing in Pakistan’
 
 
ISLAMABAD: Almost one third of World Bank’s (WB) multi-billion dollar credit financed projects in Pakistan have failed to achieve the desired results, official economic ministry documents exclusively available with the News disclosed.

 

According to the documents, this number has been rising for the last several years.

 

The portfolio assessment of WB’s funded projects in Pakistan reveals that the organization is responsible for funding projects – worth millions of dollars – like Project to Improve Financial Reporting and Auditing (PIFRA), FBR’s Tax Administration Reform Project (TARP) and Public Sector Capacity Building projects where amount may be lower but the impact on blocking key reforms is enormous.

 

The number of projects went up from 20 in 2007 to 24 in year 2012 while average implementation period increased from 3 years in 2007 to 3.4 years in 2012.

 

Problematic projects also increased with the passage of time as this number stood at 5 percent in 2007 which went up to 25 percent in 2012.

 

In terms of amount spent, this number was standing at 5 percent in 2007 which increased to 26.3 percent in 2012.

 

Twenty nine percent projects fell into the category of risk in 2012 while this number was standing at just 5 percent in 2007.

 

“The disbursement ratio declined significantly in recent years; standing at 37.5 percent in 2007 it was reduced to just 7.1 percent in 2012,” the document shows. The disbursement ratio stood at 33.8 percent in 2008, 39.9 percent in 2009, 18.7 percent in 2010, 62.1 percent in 2011 and just 7.1 percent in year 2012.

 

The disbursement ratio reduced last year mainly because Pakistan was not part of the IMF program so disbursement of the Washington based WB was also reduced substantially.

 

The WB is the second largest donor in recent years. The current Country Partnership Strategy (CPS) for FY 2010-14 implemented by the World Bank envisages a lending program for Pakistan worth $5.9 billion in these three years period under IBRD and IDA resources.

 

World Bank funded major programs in the budget with series of poverty linked reforms programs during the last one decade without significant results.

 

There is the Poverty Reduction Strategy Credit (PRSC-1 and II) program aimed at removing market distortions and providing support to the poor through improving markets. An amount of $500 million has been spent through budget. The loan was aimed at major reforms in the areas of agriculture markets, energy sector and public financial management. No visible results and benchmarks were achieved.

 

Next the Pakistan Poverty Reduction and Economic Support Operation (PRESO), which also received $500 million to support the structural reforms of PRSP-II for regaining and maintaining economic stability, while protecting the poor and vulnerable.

 

Under Pakistan Business Reforms Project, the sub-national Doing Business in Pakistan 2010 project benchmarked business regulations in 13 Doing Business areas across 6 cities and covered all provinces in Pakistan.

 

The project was funded by the United States Agency for International Development (USD 290,000), UK Department for International Development (USD 90,000) and the World Bank Group (USD 290,000). The Ministry of Finance and the Government of Punjab also dedicated resources and in-kind support to the project.

 

Under Punjab Education Sector Reform Program, under four IDA credits, a total of US$400 million was provided to support education reforms from 2004 through 2007. As a result of this funding, net enrolment of girls increased, teachers were trained and absenteeism reduced, examination standard improved.

 

For Social Safety Net Development Policy Credit and TA Project, the World Bank supported the BISP through the Social Safety Net Technical Assistance Project with $60 million (IDA). Another $159 million were disbursed against commitment of $200 million. Given the success of BISP in establishing itself as the national safety net platform, additional financing of US$150 million (IDA) was approved in February 2012. So far the BISP has disbursed more than US$1 billion in the form of cash grants to 3.5 million beneficiary families across Pakistan.

 

Through Punjab Municipal Services Improvement Project, WB has provided $50 million commercial loan for the project.

 

With Punjab Cities Governance Improvement, the WB committed to provide $154 million to support the province of Punjab’s cities in strengthening systems for improved planning, resource management, and accountability, and to improve the province’s capacity to respond promptly and effectively to an eligible crisis or emergency. The project will be completed in 2017. Under Natural Gas Efficiency Project, the aim of the WB project was to provide $272 million loan for reducing physical and commercial losses in the gas pipeline system.

 

Through Earthquake Emergency Recovery Project, the project initially got US$400 million through IDA funding, of which US$220 million was earmarked for the housing reconstruction component.

 

The livelihoods support and import financing components were allocated US$85 million each and US$10 million was assigned to the capacity building component. Following the floods of 2010, an additional US$300 million was provided to the import financing component.

 

World Bank also provided $350 million to support the Government of Sindh’s Medium Term Education Sector Reform Program (SERP) which is for increasing school participation, reducing gender and rural-urban disparities and increasing progression and improved measurement of student learning.

 

The rise in net enrolment as envisaged in PSLM data is used to substantiate the result which shows that net primary enrolment increased by modest 3 percentage points between 2006 and 2011. But this was in line with the increase between 2001 and 2006; which was achieved without spending government funds worth $3.3 billion.

 

Misplaced priorities?: PC chides World Bank for funding ‘failed projects’

“We do not need capacity building. Help us in undertaking reforms and do not hedge us against little things,” says deputy chairman of Planning Commission. ILLUSTRATION: JAMAL KHURSHID

ISLAMABAD: 

Amid increasing footprints of international donors, Planning Commission chief Dr Nadeemul Haque has criticised the World Bank for throwing money behind failed projects and venturing into areas that are not so important for the revival of the economy.

Haque’s remarks reflect an effort to highlight the donor-bureaucrat nexus that has led to unchecked benefits for bureaucrats and donor agencies alike, which is widening the debt burden of the country.

He was speaking at a ceremony organised to launch a report on the water and sanitation sector, prepared by the World Bank.

How such events are used to benefit the people involved can be gauged from the fact that to give a 15-minute presentation on the situation of water supply and sanitation in Pakistan, William D Kingdom, the Regional Lead Specialist Water, flew in from Washington.

Haque came down hard on the Washington-based lending agency at a time when the WB was ready to offer another $300 million in the name of tax reforms despite failure of the previous $150 million support for the same purpose. Despite Planning Commission’s opposition, the project is likely to be signed soon.

“We do not need capacity building. Help us in undertaking reforms and do not hedge us against little things,” said a visibly upset deputy chairman of Planning Commission while giving his concluding remarks.

He complained that the WB was either focusing on areas which came at the bottom of the country’s priority or the proposed solutions which have already been given in the Framework for Economic Growth – the strategy paper that the Commission believes offers solutions to all economic ills.

He said the Planning Commission gave policy guidelines without seeking donor funding and the WB would always conduct research in areas where it wanted to give money without caring about the outcome.

Haque also admitted the failure of the government in funding research and implementing reforms in all spheres, which eventually provided an opportunity to the donors to do work according to their will.

He said in the Framework for Economic Growth “we came to the conclusion that people need a lot more.”

“Water and sanitation is important in people’s life, but they need a lot more. They need liberty and happiness and this requires reforms, which neither the government nor the WB is ready to support,” said Haque, who could not make a dent despite remaining the head of an institution that is supposed to be ahead of present times.

He argued that the WB was ignoring critical areas like energy and civil service reforms and without conducting studies in these two areas and eventually initiating meaningful reforms the country could not progress.

He disclosed that the WB had frankly told him that it could not cooperate in these areas. “In Pakistan, bureaucracy controls everything and without civil service reforms the country cannot be put on the path of sustainable development,” he added.

Published in The Express Tribune, April 25th, 2013.

 

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