Islamabad, May 16, 2002 Thank you very much indeed Mr. Minister. Let me first of all thank you and your colleagues for the reception I have received here along with my colleagues. I think you in the Press know that this has been a very fruitful visit, including meetings with the President, Finance Minister, and his colleagues. It also included a trip to the North Western Frontier Province [NWFP] which gave me a chance to fulfill my childhood aspirations to be there and see the Khyber Rifles which I read about as a kid. I also met the Governor of NWFP and the Governor of Balochistan. Unfortunately, I was not able to go to Chitral because of inclement weather, but I was nonetheless able to meet colleagues and friends of the Aga Khan Development Network for four hours to discuss the remarkable activities which that institution is conducting in these areas. I was also able to reaffirm the partnership that we have with them over community development which we are extending with the government here in terms of their own activities. Then this morning, we had the really remarkable presentation by members of the cabinet on their reform programmes. Let me be quite brief in saying that we believe that this government is approaching the issues of the future of this country - equitable distribution of recourses and poverty - in the best way, the only possible way, which is starting the structural adjustment reforms. The results, I think, can already be seen and it was an extraordinary happening this morning as I went through the issues with the ministers, issues that kept the people down to the bedrock level. The presentation on educational reforms which are so critical and so basic - from the primary education through to higher institutions - and in particular on the work which the minister of women development is doing, was very, very impressive in terms of all aspects of this really central item on the agenda - the empowerment of women. We learnt about the work the minister is doing on population which is central to the whole of the economic development of the country and the empowerment of the women in governance and in the home. We also discussed with the president of the Central Bank the aspect of the governance of the Central Bank which impacts poverty. In many parts of the world the Central Banks are not so much concerned with the poverty aspects. However, here we have a Governor who looks into the governance of the banks, doing such an exemplary job, especially in privatization issues, dealing with the question of small and medium enterprise in terms of micro credit as we see in the signing today. The meeting today was remarkable for its openness - one could talk about the issue of corruption. In many countries you cannot do that easily and there is a recognition that this has been a problem in the country and this is a global problem. We must pay tribute to the work of the leadership in WAPDA [Pakistan Water and Power Development Authority], in Karachi Electric Supply Corporation and may I say also for the Central Board of Revenue; each of these people are in my judgment taking about as good a step as can to bring about a difference the way things are done. And as I said today, my experience is that structural changes also require cultural changes. This is not a one way street and you can change the structure, but until there is a change in the culture it is very difficult to make it work and so it is for the Pakistani citizens as well to recognize that there is a new day because typically these subsidies and assistance are not the way to go. What I saw this morning was a very very important set of steps that I think will be taken in a very transparent and in a very strong way. The $500 million credit we are talking about will flow to you with great speed, also for governance, to help the government straighten out what it is doing. And as the Minister is saying, it is IDA money, we are trying hard to provide the IDA funding the money is available for 40 years, with no interest and with a ten year no payment period, which has a very significant grant component and so we are looking to support the new government this way and will continue to do so. And may I say Mr. Minister, as I go away from here, we have been reassured about the agenda you are following. I think our partnership is very strong and I think I look forward to working with you. When I came to the Bank I felt that if you had a plan that was comprehensive and where you could get into a partnership with the government, the private sector, and the civil society - that is what you need but the one thing I did not give enough attention to is the question of time. This is not two-dimensional activity of getting the people in order, you need time to change these things and you need to stay the course so this cannot be achieved in the life time of one generation or even two, this is something the Pakistani people will need to stay with for a long period of time but the basis is remarkably sound and I am looking forward to the Bank’s participation as long as you want us. Q&A Session Question: Hanif Khalid (Jang, largest circulating Urdu newspaper): Why have you (WB) become so generous to Pakistan? Some critics also say that all the tough decisions impacting the common man are dictated to the governments by the Bank? Mr. Wolfensohn: We tailor our advice according to the needs of the country which varies. Our objective is poverty reduction. Your question about the imposition of General Sales Tax (GST) on medicine should be directed to the Minister for Finance. Shaukat Aziz: The World Bank did not ask us to impose the GST on medicines. Question: Ihteshamul Haq (Dawn, largest circulating English daily): Mr. Wolfensohn, you have visited Afghanistan, can you share with us the pace of reconstruction in Afghanistan? Mr. Wolfensohn: Things are revolving around the organization of the Loya Jirga in Afghanistan. The country is starting from the ground level. During my visit, I met women who did not have electricity, gas, shelter and health care, they didn’t have anything, but still they were optimistic. Afghanistan has this incredible resource and that is its people. Pakistan will have a major role, if it wants to, in Afghanistan’s reconstruction. Question: (Simon Denyer, Reuter): The World Bank talks about economic reforms all the time, but never about the political scenario. In October elections will be held, do you think the new set up will continue with the reforms? Mr. Wolfensohn: The decision about the future political set up is up to the people of Pakistan. I have to deal with what is in front of me. And what is in front of me are problems of poverty, on which the government has a good program. Question: Hanif Khalid (Jang, largest circulating Urdu newspaper): The Pakistan Development Forum warned not to play politics with reforms. Was the warning aimed at the Musharraf government or the next administration? Mr. Wolfensohn: So long as the basic services are provided to the people, we know that thongs are moving in the right direction. People need a chance to build their own futures. Question: Nadeem Malik (The News International, second largest circulating English daily): Why is poverty rising in Pakistan despite the Fund/Bank support? You have praised the economic reforms and the government’s performance, why then is unemployment rising? Mr. Wolfensohn: There are many factors which have led to the situation; September 11, continued drought and internal problems. What is important is you need to aim for 5% growth rate. Question: Ahmed Mukhtar (Business Recorder, most influential Business newspaper): What course of action would the World Bank suggest to the government for a quick turnaround? Mr. Wolfensohn: In my job with the Bank I have learnt to respect time. We all want the change to happen tomorrow, but life doesn’t work like that. You need patience and need to work for the future of your children. I am not a spokesperson for this government. It is up to you to decide what type of government is it that you want. Question: Zameer Haider (The Times, new English daily brought out by Najam Sethi) The Fund, government and the Bank are targeting poverty reduction. The fuel prices earlier held static, because of referendum have just been raised by 17%. Where do the poor fit into this? Mr. Wolfensohn: We hoped for regular and automatic adjustment of utility prices. Viable provision of utilities is in everybody’s interest. WAPDA and KESC alone are running a loss of $750 million. Question: Mazhar Iqbal (Khabrein, an Urdu daily): There is an impression that your (Bank’s) conditionalities are responsible for the ill doings? Mr. Wolfensohn: When I joined the Bank the "50 years are enough" campaign had already been launched. We are trying to explain what we are about. The conditionalities are not the first item on the agenda, in fact a lot of the time, it is not there at all. We are now working with governments on their priorities, and work on a mutually agreed program for poverty reduction. Question: Mehtab Haider (The Nation, an English daily): Do you think South Asia can fight poverty, considering the continued standoff of forces between India and Pakistan? Mr. Wolfensohn: Conflict prevention is the key to any development in the region. The resources spent on defense need to be diverted to the social sectors. Question: Hanif Khalid (Jang, largest circulating Urdu newspaper) Would you advise India and Pakistan to withdraw their forces from the border? Mr. Wolfensohn: I would be delighted to do that (in jest).
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