News
Saturday, October 16, 2010
Reforms needed for Pak flood aid, says World Bank
* WB country director says world wants Pakistan to do its bit, mobilise resources before expecting donors to pitch in
* Pakistan must tax the rich
BRUSSELS: Pakistan needs funds for at least one year of reconstruction after its devastating floods, but in turn it must assure donors it will revamp tax and subsidy regimes, a senior World Bank official said on Friday.
“What is important is to pledge at least the entire amount that is needed for the first eight to 12 months... that cannot wait,” Rachid Benmessaoud, World Bank country director for Pakistan, told Reuters in an interview.
Such initial funding could help to rebuild livelihoods and put cash into rural economies as villagers return to the flood-hit plains.
But a donors’ conference scheduled for next month should also present “the opportunity to secure the balance” of support needed for reconstruction, Benmessaoud said. The World Bank and Asian Development Bank (ADB) have estimated the cost of recovering from the worst natural disaster in Pakistan’s history at about $9.7 billion, and estimates of how much of that is needed in the first year are expected in the next few weeks. The ADB has said reconstruction will take two to three years.
Benmessaoud was speaking on the sidelines of a meeting of the Friends of Democratic Pakistan, also attended by ADB and IMF officials and ministers from European Union countries.
The World Bank wants assurances from Pakistan that it will put in place macroeconomic reforms, revamp its fiscal regime and cut subsidies to a derelict power sector that last year amounted to about $2.5 billion.
Mobilising resources: “There is a demand from the international community ... that Pakistan has to do its bit, mobilising resources before it can expect donors to pitch in,” Benmessaoud said.
“Pakistan must tax the rich who are not paying taxes at the moment,” he said, adding, “There needs to be better competition in the power sector. When you reduce subsidies to the power sector then you can put more girls in school.”
His comments echoed those of US Secretary of State Hillary Clinton, who said on Thursday it was “absolutely unacceptable” that Pakistan’s wealthy were not contributing more to flood relief, while the country was being helped by foreign taxpayers.
Benmessaoud rejected calls for Pakistan’s $55 billion foreign debt to be forgiven. “We have a triple-A rating which is essential... and we need to maintain it. Therefore, we cannot on our side do the debt write-off. But the economy of Pakistan has a lot of opportunity for efficiency gains,” he said.
Donations should focus on agricultural areas rich in such efficiency potential. Support for Pakistan’s textile sector – a source of foreign reserves and employment – is also important, Benmessaoud said.
“Private-public partnerships would help. Why not invest in Pakistan? This is something that has been reiterated... for companies to invest in Pakistan,” he said.
The European Union this month pledged to suspend import tariffs worth about 140 million a year on a list of Pakistani goods — mainly textile products — to revive its export sector. The decision faces opposition from European textile producers and could raise the ire of rival textile exporter India. reuters
Courtesy www.dailytimes.com.pk