World Bank, Pakistan in talks on funding package

The World Bank is in talks with Pakistan on a broad economic package that could include government-agreed reforms and financing by the bank to stabilize the economy, a bank official said on Wednesday.

Rob Floyd, the World Bank's program manager for Pakistan, denied media reports that the development lender had approved a $500 million emergency loan for Pakistan, which like other developing countries faces budget constraints due to soaring fuel and food prices.

"The World Bank has been in discussions with Pakistan on a stabilization package that may include reforms from their side and financing from ours, but we have not come to closure on that," Floyd told Reuters.

He said discussions had been under way for several months.

Media reports said the $500 million was agreed in talks between the World Bank and Pakistan's Finance Minister Naveed Qamar in Islamabad on July 14, and would be considered by the bank's board in August. The loan would help restore confidence in Pakistan following months of political turmoil.

New civilian government of Pakistan is under pressure to deal with slowing economic growth, inflation that is running at over 20 percent, exchange rate instability, and dwindling currency reserves.

Faced with a dire situation, the new government is banking on budget support from foreign and multilateral lenders to help it cope.

Decision-making in Pakistan was paralyzed during the last months of Musharraf's government, and during a caretaker administration that held the reins until the new civilian government was formed after an election in February.

Prime Minister of Pakistan Yousuf Raza Gilani said on July 1 the government wouldn't flinch from unpopular measures to put the economy on sounder footing, including raising gas prices and phasing out subsidies entirely.

World Bank loan to boost Pakistan power supply

The World Bank on Tuesday approved a $256.85 million line of credit for Pakistan to improve the reliability and efficiency of power supply in a country where poor electricity service is a major constraint to economic growth.

The World Bank estimates that Pakistan's electricity system lacks about 2,000 megawatts to cover peak demand. The country's transmission and distribution power networks are over-loaded and lack proper investment, with high technical and commercial losses.

The so-called Electricity Distribution and Transmission Improvement project aims to improve distribution and transmission networks to meet increasing demand for electricity and to strengthen capacity of electricity companies.

"While Pakistan has added about 1 million new, mainly household, electricity connections each year, about a quarter of its population still has no access to electricity, and the quality of service has been deteriorating sharply, " said Yusupha Crookes, World Bank country director for Pakistan.

"This has an adverse impact on both the normal conduct of social and economic activity and the delivery of social services."

Afghanistan needs stronger state for development: World Bank

The World Bank on Tuesday said war-torn Afghanistan needs to build a more effective state to promote economic development and urged the international community to help in the process.

"Building an effective state that can provide security and services to all Afghan citizens and make government accountable to them is critical to achieving development results in Afghanistan," the World Bank said in releasing a report ahead of the Paris Conference on Afghanistan on Thursday.

The report, "Building an Effective State -- Priorities for Public Administration Reform in Afghanistan," calls for a shift of government functions that are still performed by the international community, or are not performed at all, to strengthen Afghan institutions.

The Afghan government meets its donors in Paris with its most ambitious post-Taliban reconstruction plan on the table -- a 50-billion-dollar strategy that spans five years.

Its Afghanistan National Development Strategy envisages development of security forces and infrastructure and a new emphasis on agriculture among a range of goals.

Analysts say it is a realistic assessment of the needs still facing the destitute country seven years after the ouster of the extremist Taliban regime.

But the World Bank and others have raised concerns about how well the plan prioritises its objectives and the corruption-dogged government's capacity to handle such an enormous sum while keeping an eye on how well aid is spent.

The World Bank recalled Tuesday that the Afghan government and the international community have been working closely together for the past six years to rebuild Afghanistan after more than two decades of conflict.

The development of an effective state is at the heart of the reconstruction agenda, the bank said, and public administration reform is intended to contribute to that effort by building up civil service, improving governance and service delivery at the local level, and making government accountable.

"It is vital to persevere with the longer-term task of building an effective state, one which can gradually take on more responsibility for Afghanistan's future," said Alastair McKechnie, World Bank Director, Fragile and Conflict-Affected Countries Group.

He said the challenge lay in "finding innovative ways to improve service delivery to citizens as quickly as possible, while at the same time gradually improving the country's own capacity to deliver services without large amounts of external expertise."

The report acknowledges that public administration reform in Afghanistan is particularly difficult because of the country's strong, informal power relationships, weak formal government systems and insecurity.

It stressed the importance of building an effective civil service capable of reassuring donors that their financial support is being credibly spent.

"Unless citizens can see that civil servants are serving the larger public interest rather than their own, the government's trustworthiness will be eroded," the bank said.

World Bank offers $1.2bn food aid

The World Bank is to offer immediate financial help to countries worst hit by sharp rises in food prices as part of a $1.2bn (£608m) assistance package.

Grants worth a total of $200m are being set aside for "high priority" countries most at risk from acute hunger.

Haiti and Liberia will get $10m each to feed their most vulnerable people while Djibouti will receive $5m.

The World Bank says 100 million people could be impoverished by the rising cost and scarcer availability of food.

It has also identified Togo, Yemen and Tajikistan as being in need of immediate assistance following recent needs assessments.

'Immediate danger'

"It is crucial that we focus on specific action," said World Bank president Robert Zoellick.

"These initiatives will help address the immediate danger of hunger and malnutrition for the two billion people struggling to survive in the face of rising food prices."

Countries will be able to access money to provide food for schools and other core services as well as to buy essential items such as seeds and fertilizer.

The BBC's Kim Ghattas in Washington says the money is part of a fast track programme to address immediate requirements in the global food crisis.

Some of it will be used to handle immediate humanitarian needs, for example for pregnant woman and young children.

The World Bank will also devote an additional $2bn next year to funding agricultural projects, including crop insurance schemes.

Mr Zoellick said: "This is not an issue like HIV/Aids where you need some research breakthrough. People know what to do.

"We just have to make sure we get the resources and coordinate the operations around the world."

A United Nations report published on Thursday warned that prices for key staples such as wheat and beef could remain inflated for many years.

A world food summit is scheduled to be held in Rome from 3-5 June.

On Friday, representatives from 26 Latin American and Caribbean countries will also meet in Caracas, Venezuela, to discuss concerns over the rising cost of food.

Rising oil, food prices hurting Pakistan's poor: World Bank

Praful Patel, World Bank Vice President, ended the five-day farewell visit to Pakistan on Friday, noting that tough, yet essential, reforms can ensure that high international prices for petroleum and food commodities would not derail the country's poverty reduction and economic development.

"International oil and food prices have continued to rise since then, and we are working closely on their programme to address the cost to Pakistan of high prices, and to ensure the poorest are protected," he remarked.

A statement issued by the World Bank here on Friday said that Patel had met with Prime Minister Yusuf Raza Gilani and government economic team led by Federal Minister for Finance Naveed Qamar, and discussed the economy and safety nets to protect the poor, as domestic prices are adjusted.

In this regard Patel offered World Bank support to build upon international best practices in responding to the current situation. In meetings with President Pervez Musharraf, Pakistan People's Party Co-Chairman Asif Zardari, and President of Pakistan Muslim League-N Shahbaz Sharif, Patel thanked them for the warm reception and hospitality shown to him throughout his tenure as the regional Vice President of the World Bank.

Patel is retiring from the World Bank after 35 years' service. He expressed hope that Pakistan's development partnership, with the World Bank, would continue to grow from strength to strength. During his visit, Patel once again reconfirmed the World Bank's ongoing commitment to Pakistan.

He noted that despite uncertainty in the recent months the World Bank's programmes in Pakistan would remain on track. He said that World Bank's technical assistance with targeting exercises on the social safety nets, capacity and institution-building for water management, and electricity generation and distribution efforts would help Pakistan in meeting its development priorities.

In Sindh, Patel met with Chief Minister Qaim Ali Shah and his economic team to learn of the new government's priorities and to get an update on the ongoing World Bank assisted development initiatives in the province. Patel made a good-bye visit to Keti Bunder, a community that he has come to know over the years through Bank assisted Pakistan Poverty Alleviation Fund (PPAF) project in Thatta.

The Keti Bunder community is benefiting from social mobilisation, small infrastructure projects of drinking water and street pavements, and income generation activities under the project. "Over the last five years, I have visited Pakistan very often, and have always gone back impressed with the resilience of its people," said Patel.

"Persisting and new challenges notwithstanding, I am sure that with the right policies and strong support from its development partners, Pakistan can maintain its poverty reduction path. I take very fond memories with me and wish Pakistan well."