Pakistani Punjab's Rejection of US Aid Hurts the Poor

The Punjab government led by PML's Shahbaz Sharif spurned 20 billion rupees ($232.55 million) in US aid slated for welfare projects in Pakistan's most populous province in the next three years, according to a report in Dawn newspaper. The popular move was motivated by politics to capitalize on a wave of anti-American anger following the US raid that killed Osama Bin Laden in Abbottabad, Pakistan.



While the amount of aid rejected is relatively small, the decision's outsized impact on the poor is now coming to light. Here are some of the projects most impacted:

1. U.S. aid could have transformed Punjab Government's Lady Willingdon Hospital in Lahore, where rats run through the halls, patients sleep three to a bed, women who require C-sections aren't getting them because only one operating room is functioning, and premature babies risk death because of a shortage of incubators, according to the Associated Press.

The hospital struggles to provide even basic care. Built by the British in the 1930s before Pakistan's independence, it was meant for 80 patients. The country's population has since exploded, forcing officials to cram 235 patients into a facility that is now run-down. Paint peels off the concrete walls and black mold covers the ceilings. Patients are forced to share beds, and sometimes women who are close to giving birth have to sit on the floor for lack of space. It has only one functioning operating room, leaving women lined up to receive cesarean sections.

The hospital has only three working infant incubators, which were donated by NGOs. The hospital is forced to use overhead warmers for other infants, leaving them more exposed to disease. The $16 million offered by the U.S. would have been used to purchase 10 incubators, build a new 100-bed ward and expand the nursery and emergency facilities.

2. Another $100 million of US aid was to be used to rebuild schools in southern Punjab province that were destroyed by last year's devastating floods. An additional $10 million was meant to improve municipal services like clean water and sanitation.

3. The loss of aid for Shamaspura, a poor neighborhood in Lahore, means that its 15,000 residents will not get their only road paved, nor will they get a new sewer system.

Batool Akhtar, a poor but feisty woman quoted by the AP story, summed it up well when she said: "This is rich people denying aid meant for the poor. The government should have taken the money."

As Pakistan's ruling elite and its ghairat brigade, led by PML's Sharif brothers, engage in loud empty rhetoric about infringement of their national sovereignty by the United States, here is something to ponder:
Pakistan runs chronic budget deficits of around 5% of its GDP, and its government collects less than 10% of GDP in tax revenue which is among the lowest in the world. A big share of these deficits is funded by foreign aid and loans, making Pakistanis beholden to the interests and whims of major foreign donors and lenders.

Pakistan's tax policies are among the most regressive in the world. Direct taxes make up less than 3.5 percent of GDP, with wide ranging exemptions to powerful segments of society coupled with governance issues at Federal Board of Revenue, according to former finance minister Shaukat Tarin. The bulk of the tax receipts are collected in the form of sales tax, placing the heaviest burden on the lower-income people who spend almost all of their income on their basic needs.

Given the unwillingness of Pakistan's ruling elite to pay more in taxes, I agree with the decision of the other three provincial governments to continue to accept US economic aid. As the Punjab examples above show, refusing such aid clearly hurts the poor the most.

Pakistan would be well advised to not seek confrontation with Washington. Why? The reason is simply that the United States is the architect and the unquestioned leader of the international order that emerged after the WW II and this system still remains largely intact. Not only is the US currency the main reserve and trade currency of the world, the US also dominates world institutions like the UN and its agencies, the World Bank, the International Monetary Fund (IMF) and the World Trade Organization (WTO).

All foreign aid, regardless of its source, comes with strings attached. And those in Pakistan who think that China, undoubtedly a rapidly rising power, can replace US as a powerful friend in helping Pakistan now are deluding themselves. Today, China's power and influence in the world are not at all comparable to the dominant role of the United States. Chinese currency is neither a trade nor a reserve currency. Chinese themselves depended on the US agreement to be allowed to join the WTO after accepting terms essentially dictated by the United States in a bilateral agreement. Most of China's trade is still with the United States and its European allies. And the Chinese military power does not extend much beyond its region because it, unlike the United States, lacks the means to project it in other parts of the world.

Rather than alienate the United States and risk being subjected to international isolation and crippling sanctions like North Korea (a Chinese ally), Pakistanis must swallow their pride now and choose better ways of becoming more self-reliant in the long run.

Here are some of my recommendations for Pakistanis to move toward greater self-reliance:

1. They must all pay their fair share of taxes to reduce dependence on foreign aid and loans.

2. They must spend more on education and heath care and human development to develop the workforce for the 21st century.

3. They must invest in the necessary infrastructure in terms of energy, water, sanitation, communications, roads, ports, rail networks, etc, to enable serious industrial and trade development.

4. They must develop industries and offer higher value products and services for exports to earn the US dollars and Euros to buy what they need from the world without getting into debt as the Chinese have done.

No amount of empty rhetoric of the "ghairat brigade" can get Pakistanis to reclaim their pride unless they do the hard work as suggested above.

Related Links:

Haq's Musings

Can Pakistan Tell US to Take its Aid and Shove it?

Tax Evasion Fosters Foreign Aid Dependence

Aid, Trade, Investments and Remittances

Can Chinese Yuan Replace US Dollar?

Vito Corleone: Godfather Metaphor for Uncle Sam

Can US Aid Remake Pakistan?

South Asia Slipping in Human Development

Pakistan to Terminate IMF Bailout Early

Pakistani Military and Industrialization

Comments

Riaz Haq said…
Here's an AP report on US State Dept seeking funding for aid to Pakistan:

WASHINGTON - The Obama administration is pledging robust assistance to Pakistan despite demands on U.S. finances and a sometimes rocky relationship with Islamabad, according to a status report on Afghanistan and Pakistan.

The State Department report outlines U.S. goals in the region more than a decade after the Sept. 11 terror attacks triggered the war against al Qaeda, and the progress after billions of dollars have been spent and American lives lost. It also outlines the steps forward, looking ahead to the withdrawal of U.S. combat forces by the end of 2014.

The report was delivered to Congress on Thursday. The Associated Press obtained a copy.

"Though a tremendous amount has been accomplished, we also have no illusions about the task before us," the report said about Afghanistan. "We expect that ongoing violence, lack of institutional and human capacity, discrimination against women and vulnerable groups, and Afghanistan's incredibly low economic baseline will remain difficult challenges."

The report said the U.S. has reached its "high water mark" for civilian funding and the government in Kabul must move toward establishing revenue sources. The report said the U.S. will build a foundation for the Afghans to assume responsibility for their future.

On Pakistan, the department said the relationship with Islamabad "is not always easy, but it is vital to our national security and regional interests."

In fact, the relationship has been extremely strained the last few months to the point of breaking. Secretary of State Hillary Rodham Clinton recently traveled to the region to pressure Pakistan to crack down on the Taliban-linked Haqqani network, a major threat to American forces in the region. Adm. Mike Mullen, the former chairman of the Joint Chiefs of Staff, said Pakistan's intelligence agency was a "veritable arm" of the Haqqani.

A low point came in May when U.S. forces found and killed al Qaeda leader Osama bin Laden deep inside Pakistan.

Still, the administration insisted it will continue to provide civilian aid to Pakistan, which has fallen from $1.5 billion in the 2010 fiscal year to $1.1 billion this year. The report said next year's levels are uncertain, but the administration reaffirms its "commitment to providing robust, multi-year civilian assistant to Pakistan."

Unclear is how much Congress will push to reduce funds for Pakistan as lawmakers consider spending bills for the State Department and foreign operations.

The report suggested that a low-cost route toward improving stability in the region would be expanding U.S. market access for both Pakistan and Afghanistan.

The department said it was seeking congressional authorization for creating a U.S.-Pakistan Enterprise Fund, similar to funds created in Eastern Europe and with the former Soviet states in the 1990s.


http://www.cbsnews.com/8301-201_162-57318272/u.s-pledges-financial-aid-for-pakistan/
Riaz Haq said…
Here's a Washington Post story on tensions within Obama admin on relations with Pakistan:

Nonstop crises between the United States and Pakistan this year have fueled tensions within the Obama administration over what kind of relationship the two countries should have and who should be in charge of it.

The State Department has long smarted over the preeminence of military and intelligence priorities, which seems to leave diplomacy in a distant third place. The result, diplomats say, is that there is little goodwill to cushion blows such as the U.S. airstrike last month that left two dozen Pakistani soldiers dead along the Afghanistan border.

More than a week after the attack, President Obama called Pakistan’s president on Sunday to say that the deaths were “regrettable,” stopping short of an apology that many in Pakistan have called for.

The airstrike has cast a shadow over a major diplomatic gathering Monday in Bonn, Germany, that the administration hoped would help facilitate plans to wind down the Afghanistan war. Pakistan has said that it will not attend the meeting, which brings together more than 100 countries and international organizations and whose agenda includes regional and Afghan development and peace talks with the Taliban.

Secretary of State Hillary Rodham Clinton, who will lead the U.S. delegation, unsuccessfully appealed for a change of heart in a telephone call Saturday to Pakistani Prime Minister Yousuf Raza Gilani.

The U.S.-Pakistan breach has also set back Obama administration attempts to improve the brittle relationship between Pakistan and Afghanistan. Afghan President Hamid Karzai told Germany’s Der Spiegel magazine on the eve of the Bonn meeting that he thought Kabul’s closest neighbor was trying to sabotage the possibility of peace negotiations.
-----------
Until his retirement in September, Adm. Mike Mullen, who was chairman of the Joint Chiefs of Staff, was the most public face of the bilateral relationship. Mullen’s trips to Pakistan for face-to-face meetings with Pakistan’s army chief, Gen. Ashfaq Kayani, were far more frequent than Clinton’s visits with the civilian authorities.

When an exasperated Mullen publicly accused Pakistan’s military of supporting Afghan insurgent groups in congressional testimony just before leaving office, some State Department officials said they felt blindsided.

On a subsequent visit to Pakistan in October, Clinton insisted on leading a delegation that included CIA Director David H. Petraeus and Mullen’s replacement, Gen. Martin E. Dempsey.

But the State Department’s efforts to assert at least the appearance of control over U.S. policy are regularly undermined by a steady stream of congressional visitors to Pakistan who “all want to visit Kayani,” an administration official said. “They don’t want to talk to their civilian counterparts” in Pakistan’s Parliament, “and they only want to stay a few hours,” the official said.

Retired Maj. Gen. Mahmud Ali Durrani, a former national security adviser to Gilani and Pakistani ambassador to the United States, agreed with that reality and the impression it leaves in Pakistan. “You look at the visitors from Washington,” Durrani said. “They would go and spend time with the president, then most of the serious discussions they had with the army chief.”

“In my view,” he said, “there is one and only one issue” between Pakistan and the United States, “and that is counterterrorism. And that is in the lap of the security establishment. So that, in itself, is a problem.”


http://www.washingtonpost.com/world/national-security/us-breach-with-pakistan-shows-imbalance-between-diplomatic-security-goals/2011/12/03/gIQAd2DsTO_story_1.html
Riaz Haq said…
US State Dept & Sen Feinstein defend US aid to Pakistan, according to Dawn:

WASHINGTON: The US State Department on Tuesday defended aid to Pakistan amid calls from senators for a full review of whether economic and military assistance there serves the US national interest.

“We believe our assistance to Pakistan still continues to provide dividends for the American people in trying to grow and strengthen Pakistan’s democratic institutions, boost its economy,” said spokesman Mark Toner.

“In the long term, you know, those are the kinds of things we’re seeking to achieve,” he told reporters one day after Republican Senators John McCain and Lindsey Graham made a full-throated call for reevaluating the aid.

His comments came shortly after US Senate Intelligence Committee Chair Dianne Feinstein said that cutting assistance to Pakistan would be unhelpful but warned that calls to do so had strong congressional support.

“I don’t think that’s useful,” she told reporters. “My understanding is that there’s some overtures under way to restore the relationship. Well, that’s fine, but I suspect that if a bill were to come to the floor which fenced money, the bill would have a good chance of passing,”she said.

US lawmakers have expressed mounting anger at Pakistan, accusing military and intelligence officials there of supporting the Haqqani network blamed here for attacks on US forces and targets in Afghanistan.

“I can only express my profound disappointment with the relationship” and the “deterioration” in an already troubled alliance that “goes up and down, and up and down, and up and down,” she said.

“My very strong feeling is you can’t walk both sides of the street with respect to terror,” said Feinstein.

Relations slid to a new low last month when Nato air strikes killed 24 Pakistani soldiers on the Afghan border, prompting Pakistan to boycott an international conference in Bonn on Afghanistan’s future.

“This is a very complex relationship,” Toner said, adding that the deadly border incident “was difficult for the Pakistani people, for the Pakistani government.”

“They have reacted in a way that shows how important and how significant this tragedy was for them,” Toner said.

“It’s absolutely essential that Pakistan, Afghanistan and the US, other international partners, work through this and beyond. It’s in all our interests.”

But Republican Senator Mark Kirk told AFP that McCain and Graham, who serve on the Senate Armed Services Committee, “are right.”

“Military aid to Pakistan is unsustainable, and in this time of deficits and debt, we ought to save the money,” he said, warning that if Pakistan has chose “to embrace terror and back the Haqqani network,” it should do so “without subsidies from the US taxpayer.

Kirk has also called for bolstering ties to India and “making India a military ally of the United States and to encourage India to fill the vacuum in Kabul once we leave.”


http://www.dawn.com/2011/12/07/us-state-dept-defends-pakistan-aid.html
Riaz Haq said…
United Kingdom will likely to increase its aid to Pakistan upto 350 million (Pounds) a year till 2015, prioritizing uplift of education and health sectors, according to APP:

"The major portion of our aid will focus on getting more than four million children into school, recruit and train 90,000 new teachers and provide more than six million text books," George Turkington, Head of the UK's Department for International Development (DFID) in Pakistan said.

During his visit to a crisis centre for women (Bedari) in Chakwal, he said the UK government would provide assistance to prevent 3,600 mother's deaths in childbirth; another half a million children from becoming under-nourished and another 400,000 couple’s access family planning and contraceptives.

The UK will also support the country to empower women by strengthening legislation on land rights, marriage rights and domestic violence and get more girls and women involved in decision making at community and federal level so that they can demand their basic rights.

Head of DFID said that over recent years, UKaid has provided 35,096 women victims of violence with counselling, refuge, rehabilitation support and legal aid.

He said that UKaid provide monthly stipends to some 680,000 poor girls to help keep them in school and provided millions of free school text books.

He said that UKaid has also facilitated 1.2 million micro finance loans to poor women, helping them to lift their families out of poverty.

The DFID official also met beneficiaries at Bedari office a local NGO.

http://www.brecorder.com/pakistan/banking-a-finance/38265-uk-likely-to-rise-aid-to-pakistan-upto-350m-pounds-.html
Riaz Haq said…
Here's an APP report on US Ambassador Cameron Munter on US-Pak tied after Nov 26 tragic border incident:

United States Ambassador to Pakistan Cameron Munter Monday said Mohmand Agency incident was a setback for the ties of Pakistan and the United States, and his country wanted to rebuild cooperation in areas of economy, military and intelligence sharing.In an interview to a private television channel, he said Mohmand Agency incident happened when the two countries were having military and intelligence cooperation and they were collaborating on economic matters.He said the events of November 26 were a real tragedy and President Obama called President Zardari, Secretary Hillary Clinton called Prime Minister Yusuf Raza Gilani and the US military leadership contacted Pakistani army chief to share their sorrow.

“In fact when people die, whether they are Pakistanis or Americans, it is too many and it was a tragedy that it happened. We have really tried to make it clear how sorrowful we are about this event. We feel the pain of the Pakistani people,” he added.
Munter said the US has pledged full investigation of the incident and “in the coming days, most of all we want to make sure that we learn from this and this never happens again.”
He said the NATO attack was not intentional and the mechanism which should have stopped the incident failed on that day.
“The mechanism that should have prevented this failed. We need to work together to make sure that mechanisms are in place and this should not happen again.”
Munter said it was not true that there was no investigation into the case of Raymond Davis and said there was a group of officials of Department of Justice who were following up as promised
by Senator John Kerry and by him.
“These officials have come to Pakistan and they are talking to Pakistani officials to do their best to convince the Pakistani people that we are following up as we promised,” he added.When asked to respond to continuing halt of NATO supplies, Munter said he was hopeful that the stoppage will not last. “As we work through this tragic incident, which should never have happened, we find a way to work together and this stoppage would not be necessary.”
He said US, Pakistan and all of their friends are trying to fight militants to protect their way of life and values that they share and they need to work together to fight them.
“We are in constant contact with Pakistan people to find out how we can work together in the fight against militants and how you understand our sorrow about this tragedy.”
The ambassador said the US Central Command has formed a commission led by Brigadier General Clarke to investigate the NATO attack.
“We do not want to judge what he has found and there is difference of opinion about what happened that day. We do not want to judge until that investigation is finished and when that investigation is finished we want to be able to share it with you,” he remarked when asked why the US is not offering an apology.
To a question, he said there are two investigations, one being run by NATO and the other by the US Central Command into the Mohmand Agency incident and they will share information and findings with Pakistan.
He stressed that the NATO attack on Pakistani troops in Mohmand Agency was not deliberate and even President Obama and General Dempsey told this to their Pakistani counterparts.
“We are terribly distressed. It should not have happened it was not done on purpose.”....


http://ftpapp.app.com.pk/en_/index.php?option=com_content&task=view&id=170029&Itemid=38
Riaz Haq said…
Here's a news story on US civilian aid to Pakistan:

In a written reply to a question raised at the daily press briefing, the State Department said, “Civilian assistance to Pakistan continues and has not been interrupted since the tragic Nov. 26 incident.”

“Since the passage of the Kerry-Lugar-Berman legislation in October 2009, the U.S. government has disbursed $2.2 billion in civilian assistance, including approximately $550 million in emergency humanitarian assistance,” said the statement, adding, “In FY 2011 specifically, we disbursed approximately $855 million (not including any emergency humanitarian assistance).”

With the majority of Pakistanis claiming they see no evidence of U.S. economic assistance, Washington still struggles to fashion an effective program of civilian aid. However, data provided by the U.S. State Department created a different impression.

“In 2011 the people of the United States supported the construction of 210 kilometers of road in FATA and Khyber-Pakhtunkhwa, funded the world’s largest Fulbright exchange program, and sponsored initiatives promoting private sector growth and civil society development in Pakistan,” said the statement.


http://gantdaily.com/2012/01/20/u-s-confirms-no-interruption-in-flow-of-american-taxpayer-dollars-to-pakistan/
Riaz Haq said…
Here's a WAM story on UAE assistance program for Pakistan:

..The KPK governor, the UAE Ambassador and other diplomats cut a special cake. The national anthems of the two countries were also played on the occasion.

Paying tribute to the armed forces for their role in the rehabilitation of Swat and thanking the UAE government for its generous assistance, Kausar hoped that the both countries would improve trade, diplomatic, and cultural ties.

Major General Zahir Shah, Commander of the GOC 45th Engineers Division of the Pakistani Armed Forces, said 124 projects have been implemented by the Programme in Swat and the tribal areas, thanks to the strength of the UAE- Pak relations. He added that the achievements will further develop the local educational and health sector to contribute positively in overall national development.

Pakistani people expressed their gratitude toward the President His Highness Sheikh Khalifa bin Zayed Al Nahyan for the UAE humanitarian programme and assistance projects to Pakistan.

UAE will support water supply projects in Khyber Pakhtunkhwa region, Bajaur district and South Waziristan district of the country for supplying clean drinking water to the villages and urban residential areas.

The regions hit by war and natural calamities would see better water supply through 26 projects supported by the UAE authorities.

The Programme comes within the framework of the good efforts by the UAE to help Arab and Islamic countries as one of the leading donors in the field of humanitarian aid and international development around the world.

The UAE and Pakistan maintain long-standing and close friendly relations since the founding of UAE by late Sheikh Zayed bin Sultan Al Nahyan. It has been an integral part of the UAE leadership's vision to support Pakistan. UAE does not only provide support to Pakistan in the times of crises i.e. natural calamities, earthquakes and floods but also work towards maintaining Pakistan's comprehensive security, stability, economic progress and prosperity.

In line with a recently signed Memorandum of Understanding (MoU) between the two countries UAE will execute a comprehensive development plan costing an estimated amount of US$110 million to create job opportunities and develop flood-hit areas of Pakistan.

Addressing the launching ceremony, Abdullah Al Ghafli, Director of the Project, said the UAE had played a significant role in mobilising international humanitarian cooperation in support of the Pakistani brethren based on strategic and humanitarian considerations enshrined in 'our foreign policy'.

According to him, the UAE aid aims to help the Pakistani people survive calamities they face and its government to address and overcome economic woes in order to achieve sustainable development.

'Built on an integrated field study on Khyber Pakhtunkhwa Region and Tribal Areas near Waziristan, the assistance programme will be implemented in coordination with the Pakistan Army Command and other relevant government bodies,' he added.

The project calls for building and rebuilding of a number of hospitals and health clinics, establishing a new nursing institute, commissioning of water purification, water resources management stations, and extending drinking water networks. Two devastated bridges will be rehabilitated and new roads will be built by the Khalifa bin Zayed Charity Foundation.
Riaz Haq said…
Here is a News report on US Aid for Pakistani universities:

The United States will build new Faculty of Education buildings at six Pakistani universities and renovate a seventh education facility, as part of an agreement signed Wednesday between the universities and the US Agency for International Development (USAID), said Karen Freeman, USAID Deputy Director for Pakistan.

She stated this while addressing the signing ceremony of a memorandum of Understanding for construction and rehabilitation of faculty of education buildings, says a press release. The construction will take place over the next two year and the new and renovated buildings will eventually house approximately 2,000 students of two new teaching degrees: the four year Bachelor’ Degree in Education and a two-year Associate Degree in Education in teaching that USAID helped design and introduce in order to increase quality of teacher preparation across the country and 100 faculty members each year.

“Pakistan and the United States have enjoyed a long and productive relationship that spans more than 60 years and covers a variety of fields. Today’s ceremony is yet another expression of the US Government’s long-term commitment to help build a stronger, more prosperous Pakistan,” she added.

“It gives me great pleasure to be here with you today to witness the signing of the MoU between the seven of country’s public universities and two of USAID implementing partners for the construction and rehabilitation of Faculty of Education buildings across the country. The contribution to the Pakistani education system is yet another example of the US long-term commitment to helping Pakistan address its development priorities.

“Our collaboration in higher education sector spans more than five decades. One of our first undertakings in this sector was the construction of the Institute of Education and Research at the University of Punjab in 1960s. fifty years later, this institute continues to help the country shape its education policies. Over the years, we have worked together to build more higher education institutions that have since become premier centres for knowledge and learning. I am very proud to list among such the Institute of Business administration in Karachi, the Lahore University of Management Sciences, the Faisalabad Agriculture University as well as the Peshawar Agriculture University, and many more,” she said.

Karen Freeman said: “I am happy that through today’s commitment we are continuing this tradition of supporting Pakistan in its efforts to develop strong education institutions.” She said that these new facilities will help attract and train best young minds to teaching profession and will help improve the professional knowledge and skills of many other teachers.

Higher Education Commission Chairman Dr. Javaid Laghari appreciated the efforts of the US Government for improving the quality of education across the country. The $15 million construction initiative was officially launched today at the Higher Education Commission, where representatives of the USAID signed MoU with representatives of the seven universities. As part of the agreement, the US will construct new Faculty of Education buildings at the Sardar Bahadur Khan Women University in Quetta; the Hazara University in Mansehra; the University of Education in Lahore; the University of Sindh in Hyderabad; the University of Karachi in Karachi; and the Sardar Abdul Latif University in Khairpur (Sindh). The US will also help renovate the Institute of Education and Research at the University of the Punjab.


http://www.thenews.com.pk/TodaysPrintDetail.aspx?ID=90967&Cat=6&dt=2/3/2012
Riaz Haq said…
US allocates $2.4 billion in aid for Pakistan in 2013, according to Express Tribune:

The White House has allocated $800 million for Pakistan’s Counterinsurgency Capability Fund (PCCF) in its budget for fiscal year 2013, whereas the State Department and USAID budget for Pakistan comes to $2.4 billion.

The budget, which will go to Congress for approval, shows a decrease of $50 million in the allocation figure for PCCF from last year. The purpose of the fund is to “build and maintain the counterinsurgency capability” of Pakistan’s security forces. The services provided by the US include human rights training, providing equipment, supplies, training and infrastructure repair.

The description of the PCCF stated in the budget documents released by the State Department state that the PCCF “enhances the capabilities of the Pakistan Army, the Pakistan Air Force, and the Frontier Corps by meeting their needs for training, equipment, and infrastructure. The PCCF will assist the Government of Pakistan to eliminate the violent extremists’ ability to operate along its border with Afghanistan. The PCCF account will draw down when the need for intensive support for engagement against terrorist organisations in Pakistan declines.”

State Department

In a press release issued by the State Department, the budget allocation requested for Pakistan for FY2013 is $2.4 billion. This includes the $800 million cited in the PCCF, and is meant for assistance to “strengthen democratic and civil institutions that provide a bulwark against extremism, and support joint security and counterterrorism efforts.

Certifications

The budget documents also outline certifications that the US secretary of State is required to make to various Congress committees before funds such as the Foreign Military Financing Program, PCCF etc. can be allocated.

According to the conditions, the Secretary must certify that Pakistan is cooperating with the US in counterterrorism efforts against the Quetta Shura, Haqqani Network, Jaish-e-Mohammad, Lashkar-e-Taiba, al Qaeda and other domestic and foreign terrorist organizations. Pakistan must not be supporting terrorist activities against the US or coalition forces in Afghanistan.

Interestingly, a condition includes that the Secretary of State must certify that, “Pakistan’s military and intelligence agencies are not intervening extra-judicially into political and judicial processes in Pakistan”


http://tribune.com.pk/story/336108/us-unveils-budget-with-trimmed-pakistan-aid-subject-to-conditions-of-course/
Riaz Haq said…
The World Bank will extend an assistance of upto $5.5 billion over FY 12-14 to support Pakistan’s poverty reduction and development agenda, reports Pakistan Today.

According to Bank’s Country Partnership Strategy Progress Report, a mid term review and implementation assessment, the Bank has responded flexibly in the face of the tremendous challenges Pakistan has gone through over the past year or so.
World Bank Country Director for Pakistan Rachid Benmessaoud said they will continue strong support to Pakistan while keeping a keen eye on implementation to ensure that these efforts translate into real results on the ground.
The progress report says the overall focus of the Bank’s strategy- to help Pakistan’s economy get back onto the path of high, sustained growth –remains valid and consistent with the overall priorities of the government of Pakistan as articulated in its New Framework for Growth Strategy. Also, the Bank support will remain centred on the original pillars of the CPS- the economic governance, human development and social protection; infrastructure and security and conflict risk reduction.
The Bank engagement over FY 12-14 is projected at up to $ 4 billion in new International Development Association (IDA) credits and International Bank for Reconstruction and Development loans. This will be supplemented by a robust programme under the Multi donors trust fund (MDTF) with initial commitment of $ 140 million and IFC support projected at $ 1.5 billion.

http://www.pakistantoday.com.pk/2012/02/wb-to-provide-5-5b-to-pakistan-in-3-years/
Riaz Haq said…
Here's an excerpt from Dawn report on Punjab's economy:

The slowing regional growth has led to contraction in Punjab’s share in the national economy to 54.9 per cent in 2011 from 55.5 per cent in 2000 and 55.7 per cent in 2007.

Punjab’s economy, according to the IPP, is composed of 24 per cent agriculture (17 per cent for the rest of Pakistan and 20.9 per cent for Pakistan), 21.2 per cent industry (31 per cent for the rest of Pakistan and 25.8 per cent for Pakistan) and 54.8 per cent services (52 per cent for the rest of Pakistan and 53.3 per cent for Pakistan). The provincial economy’s sectoral composition signifies relative importance of agriculture in its economy and underdevelopment of industry as compared to the rest of Pakistan, says the IPP.

The report identifies three major factors that have dragged down economic growth in Punjab in recent years: decreasing water availability for agriculture, growing energy crunch for industry and declining public sector investment in economic infrastructure.

The IPP points out that performance of agriculture plays a major part in the economic growth of the province. During the last few years, it contends, the performance of agriculture sector has been disappointing, especially of major crops that have shown little growth since 2007 due to growing water shortages and rising fertiliser prices. Wheat production was virtually stagnant and output of sugarcane and cotton dropped by 10 per cent and 17 per cent respectively. The only crop with significant growth of 26 per cent was rice. In addition, there was hardly any growth in minor crops. Given the relatively large share of agriculture in the regional (Punjab) economy, the growth rate is likely to be lower because even in good years agriculture is unlikely to average a growth rate above four to five per cent,” it underlines.

The annual average agriculture growth rate in Punjab declined to just one per cent between 2007 and 2011 from 3.3 per cent between 2000 and 2007. In contrast, the average agriculture growth rate rose to three per cent for the rest of Pakistan from 2.5 per cent.

Growing energy shortages have affected industrial output in Punjab disproportionately, according to the report. There has been cumulative drop in gas consumption in the province of 13 per cent in the last few years compared to an increase of 16 per cent in the rest of Pakistan, especially in Sindh.

Similarly, increase in electricity consumption since 2007 has been restricted to only two per cent compared to six per cent in the rest of Pakistan. Punjab’s share in the national production of cotton yarn, for example, dropped from 33 per cent in 2007 to 29 per cent in 2011 and in cotton cloth from 43 per cent to 37 per cent.

Additionally, the report underlines the weaker presence in Punjab of industry producing consumer durable and construction inputs compared to Sindh as another factor for slower growth. “In the peak of business cycle, industries producing consumer durables like automobiles and industries providing construction inputs like cement show very high growth rates. During 2003 and 2007, for example, production of automobiles showed extraordinarily high growth rate of 31 per cent. The growth rate of cement industry was also high at 18 per cent.


http://dawn.com/2012/05/21/punjabs-lost-growth-momentum/
Riaz Haq said…
US AID promoting private equity investment in Pakistan's SME sector, reports Express Trib:

..$80 million, earmarked by the Obama administration under the Kerry-Lugar-Brahman Act for the Pakistan Private Investment Initiative

Crowding-out of the private sector from credit channels due to reckless government borrowing has provided a unique public relations opportunity to the US. The US has said it will offer loans ranging from $500,000 to $5 million to small and medium sized business in Pakistan, to help the latter expand and create jobs.

In total, $80 million, earmarked by the Obama administration under the Kerry-Lugar-Brahman Act for the Pakistan Private Investment Initiative, will go towards providing cheaper financing and equity to small and medium enterprises (SMEs) in Pakistan.

“The United States Agency for International Development (USAID) will provide up to $24 million for an equity fund, and fund managers will be required to match the requested funding to take the size of each equity fund to at least $45 million,” said Theodore Heisler, the project manager and senior economic growth advisor to USAID.

Heisler said that co-investment was essential in bringing the size of each fund to a level where it can cover operating expenses. The US intends to create at least three funds, but is, as yet, noncommittal to the total number. US authorities are on the lookout for good fund managers, and the availability of quality managers will determine the numbers of the funds, officials have said. During the last fiscal year, the federal government borrowed Rs1.77 trillion to finance the budget deficit. The State Bank of Pakistan has already warned that due to increasing government borrowing, there is little credit available for the private sector to grow.

“Having access to finances is a challenge for SMEs, as there is little equity and debt available for the sector,” said Heisler. “The longer term goal is to help expand the market for private equity investment and provide money that is not available through banks and other international lending agencies,” he added. He said the real job growth potential lies in the SME sector, as the corporate and public sectors cannot create unlimited jobs.

Heisler said each fund will have a 10-12 year lifespan. Individual investment sizes will range from $500,000 to $5 million, but could vary depending upon requirements. The initiative has been modelled on the Polish American Enterprise Fund, which was started with $140 million and has now grown to a multi-billion dollar fund.

Heisler said the US is looking to create a private equity industry in line with global standards, as there is hardly any private equity investment fund in Pakistan. He said the other purpose was fetching foreign investment through co-investment, as investment in Pakistan is dwindling.

The US is currently looking for fund managers who have a successful history, and Heisler said that both local and international fund managers have expressed interest in the project.

To a question whether Pakistani fund managers have expressed reluctance due to doubts over long-term commitment issues with the US, the US embassy replied “we believe there will be substantial interest from local, regional and international investors”.

It further said that “the US government designed the Pakistan Private Investment Initiative after a year of research and consultations with numerous stakeholders, including the Pakistani private sector and regulatory authorities.” It added that USAID will structure the funding to ensure that it is sustainable.


http://tribune.com.pk/story/442469/credit-crunch-as-banks-turn-their-backs-on-private-sector-us-steps-in/
Riaz Haq said…
#USAID to spend $ 450m on health, education, ag, energy, women projects in #Pakistan: director http://www.pakistantoday.com.pk/?p=492255 via @ePakistanToday

The United States International Development Agency (USAID) has planned to spend about 450 million US dollars in next American financial year on various projects from education to health and energy to agriculture beside others in Pakistan.

This was stated by Mission Director USAID to Pakistan John Groarke while talking to APP on Sunday about projects being executed and planned to be executed by the USAID in various parts of the country

He said that the USAID had executed hundreds of projects focusing five major areas – health, education, agriculture, economic growth and energy besides other areas especially women empowerment programme.

Responding to a question about agriculture dairy potential, the Mission Director said that Pakistan has a huge dairy farming potential to earn billions of dollars by exporting agricultural and dairy products.

Giving examples of agriculture and dairy products, John Groarke said that Pakistan has potential to export a large quantity of mangoes and oranges as these two Pakistani fruits were known worldwide.

“Pakistan has capacity to earn billions of dollars by capturing the world market through exporting dairy products and vegetables,” the Mission Director said.

Speaking about the importance of Pakistan for USA, the Mission Director said, “Pakistan is an important country for USA and a stable, secure and democratic Pakistan with a vibrant economy is in the national interest of the United States and Pakistan.”

According to documents made available to APP about projects of USAID, the United States has demonstrated a continued commitment to Pakistan through Kerry Lugar Berman Act. Since 2009 and the US government has disbursed over 4 billion dollars in civilian assistance in partnership with the Government of Pakistan (GOP), civil society and private sector institutions.

The USAID is executing hundreds of projects in various parts of the country and AJK having its offices in Islamabad, Lahore, Peshawar and AJK.

Popular posts from this blog

China Sees Opportunity Where Others See Risk

Smartphones For Digital & Financial Inclusion in Pakistan

Economic Comparison Between Bangladesh & Pakistan