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Implementation Completion Report (ICR) Review - SIMPLIFIED - Pakistan PRSC I

1. Project Data:   
ICR Review Date Posted:
Project Name:
Project Costs(US $M)
 900  n/a
Loan/Credit (US $M)
 300  300
Sector, Major Sect.:
General agriculture fishing and forestry sector, Central government administration, General public administration sector, Other social services, General industry and trade sector,
Agriculture fishing and forestry; Law and justice and public administration; Law and justice and public administration; Health and other social services; Industry and trade
Cofinancing (US $M)
L/C Number:
Board Approval (FY)
Partners involved
Closing Date
12/31/2004 12/31/2004
Evaluator: Panel Reviewer: Group Manager: Group:  
John H. Johnson
Zeynep Taymas Kyle Peters OEDCR

2. Project Objectives and Components:

a. Objectives
PRSC I is the first of three planned operations intended to support key aspects of the Pakistani Government's Poverty Reduction Strategy, including: 1. Promoting economic growth while maintaining macroeconomic stability.

2. Promoting improved governance and effective devolution of certain public policy functions to the provinces and local governments.
3. Promoting investment in human capital. And,
4. Targeting the poor and vulnerable with improved social services.

b. Components (or Key Conditions in the case of Adjustment Loans):
The following were the operation's key components by objective (prior actions are displayed in bold):

1. (a) Maintenance of macroeconomic stability.
(b) Submission of a draft Law on Fiscal Responsibility and Debt Limitation to the National Assembly.
(c) Acceleration of reform of the Central Board of Revenue (CBR).
(d) Implementation of selected measures advancing budgetary management reform.
(e) Executive Branch approval of an Action Plan for recovery of the power sector.
(f) Completion of the privatization of Habib Bank.
(g) Approval of a telecommunications policy enabling free entry of private sector competitors to the landline market and expanded licensing of mobile phone operators.
(h) Implementation of a transparent pricing framework for retail natural gas, and rationalization of consumer subsidies.
2. (a) Adoption of national procurement rules compatible with international best practice.
(b) Improvement in the timeliness and accuracy of governmental accounting statements.
(c) Establishment of a Federal Public Accounts Committee in the National Assembly.
(d) Extension of computerized accounting to at least 8 sites.
(e) Comprehensive civil service reform strategy drafted, including broad contours of a National Executive Service.
3. (a) Consolidated public education expenditures increased to at least 2 percent of GDP during FY03.
(b) Introduction of a National Education Assessment System (NEAS) and completion of a pilot assessment of the Fourth Grade cohort.
(c) Implementation of curriculum revisions for Grades 1-12.
(d) Consolidated public health expenditures increased to at least 0.7 percent of GDP during FY03.
(e) Government contracting of NGOs to deliver tuberculosis, malaria, and HIV/AIDS preventive and curative services.
4. (a) Initiation of a comprehensive evaluation of various existing safety net programs.

c. Comments on Project Cost, Financing, Borrower Contribution, and Dates
The project was a single-tranche programmatic credit in the amount of US$300 million equivalent. Full disbursement took place on September 14, 2004, twelve days after approval.

3. Relevance of Objectives & Design:

All objectives are considered highly relevant, having been identified first in the Government's PRSP of 2003, and supported by extensive prior AAA. Interventions were generally well conceived, although, due to lack of available data on the operation of the existing social safety net, significant progress toward improving the delivery of social services to the poor and vulnerable had to be postponed until approval of follow-on PRSCs.

4. Achievement of Objectives (Efficacy) :

1. Substantial. Economic output growth accelerated to an annual average real rate of 6 percent annually during 2002-2005; the Fiscal Responsibility Bill was recently approved by the National Assembly, and will soon be signed into law; and the budget deficit of the national government remained at historically low levels. Privatization proceeded satisfactorily, and was recently expanded by the sale of the publicly-owned Telecommunications Enterprise. Liberalization of telecommunications policy produced major improvements in connectivity. Foreign investors display significantly increased interest in the Pakistani market over the past twelve months. However, acceleration of inflation to 9 percent annually remains a concern, as does the slow progress in rationalizing consumer power and natural gas subsidies.
2. Modest. Revision of procurement rules so that they now conform to international best practice, constitutes a major opportunity to reduce waste and corruption. However, to date, enforcement of these new regulations has languished, awaiting key follow-up actions on implementing regulations and monitoring and reporting mechanisms. Public accounting and auditing have improved substantially in timeliness and coverage. But, progress in restructuring the civil service has been slow, and follow up on creating a National Executive Service meager. Likewise, progress on pay and pension reforms has been limited. Devolution of health and education services to local and provincial governments is proceeding, but with spotty results, given unresolved tensions between levels of government and weak implementation capacity in many regions.
3. Substantial. Public spending on education and health increased, although only the former met its GDP share goal in FY04. Moreover, extensive pilots are underway to improve baseline data, as well as the monitoring and reporting of results; they are expected to improve the understanding of results over the next several years. Twelve NGOs have been have been made official partners of the Government in providing a broad array of curative and preventative services. Preliminary results of a new household survey suggest that net education enrollments and immunization coverage have improved considerably.
4. Modest. Evaluation of the safety net was completed, and provided timely guidance to PRSCs 2 and 3 in supporting follow-on interventions. However, the tangible impact of this survey on service delivery to the poor and vulnerable was understandably modest.

5. Efficiency:

Not rated.
6. M&E Design, Implementation, & Utilization:

Major emphasis was placed on improving statistical, monitoring, and evaluation systems. Parallel operations are directed toward building this capacity at the federal, provincial, and local levels. However, other than a few budgetary spending targets, quantifiable performance indicators were largely absent from the design of PRSC I.
7. Other (Safeguards, Fiduciary, Unintended Impacts--Positive & Negative):

None indicated.

8. Ratings:
OED Review
Reason for Disagreement/Comments
SatisfactoryModerately SatisfactoryModest progress on reform of the power, social, and civil service sectors, and on enforcement of revised procurement regulations, prevented full attainment of project objectives.
Institutional Dev.: 
Bank Perf.: 
Borrower Perf.: 
Quality of ICR: 

- When insufficient information is provided by the Bank for OED to arrive at a clear rating, OED will downgrade the relevant ratings as warranted beginning July 1, 2006.
- ICR rating values flagged with ' * ' don't comply with OP/BP 13.55, but are listed for completeness.

9. Lessons:

10. Assessment Recommended?  Yes

          Why?  This is the first of a cluster of programmatic loans in an important Borrower facing major development challenges. Of particular interest would be a review of the effectiveness of this broad-based approach to development policy lending, keeping in mind the recent recommendation of the Pakistan CAE that such lending in future be more narrowly focused.

11. Comments on Quality of ICR:

This Simplified ICR provides a strong, thoughtful accounting of the results anticipated from adoption of
the various prior actions supported by PRSC I. The policy matrix at Annex I is excellent. However, in rating achievement of the objectives (Section 4), the components should have been aggregated by objective, and the bottom-line assessment of efficacy tied to the four objectives, rather than the myriad components. Had it done so, the ICR rating of outcome might have more readily acknowledged the influence of important shortcomings in the power, social, and civil service sectors in its rating of outcome.

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