World Bank to boost support to agriculture

The World Bank has announced it will provide $9.350 billion in soft loans to aid the agriculture, health and education sectors in developing countries.

The move will help countries meet or make progress towards achieving the UN Millennium Development Goals by 2015.

Specific to agriculture, the World Bank officials say given rising food prices and the possible return of the food crisis, the World Bank Group will boost support to agriculture to the tune of $8.3 billion a year up from $4.1 billion annually before 2008, under its Agriculture Action Plan.

The bank will also increase its zero-interest and grant investment in basic education by an additional $750 million, with a focus on the countries that are not on track to reach the education MDGs by 2015, especially in Sub-Saharan Africa.

For the case of health, the Bank will focus on 35 countries, particularly in East Asia, South Asia, and Sub-Saharan Africa, which face challenges in achieving their MDGs because of high fertility and poor child and maternal nutrition and disease.

This will expand the reach of the bank’s result-based programmes by more than $600 million to scale up essential health and nutrition services and strengthen the underlying health systems which are essential to sustain better health results over the years. All these are are outlined in a new report titled Unfinished Business: Mobilizing New Efforts to Achieve the 2015 Millennium Development Goals - a new Bank report prepared for the MDGs review summit.

Since the inception of UN MDGs in 2000; the World Bank MDG results indicate that the World Bank Group is fully committed to assisting countries meet and reach the MDGs by: more than doubling the International Bank of Reconstruction and Development (IBRD) and International Development Association (IDA) zero-interest lending, from $50 billion in FY07-08 to $106 billion in FY09-10.

The World Bank estimates that as a result of the food, fuel and financial crises, 64 million more people are living in extreme poverty. By 2015, 1.2 million more children under five may die, and about 100 million more people may remain without access to safe water.

Speaking in Washington last week, the World Bank Group President, Mr Robert B. Zoellick, said: “As we take stock of the MDGs so far, we see the crisis only made things worse with too many of the world’s people hungry, poor or vulnerable to poverty, with too few jobs and too little access to services and economic opportunity.”

“We must therefore redouble efforts to target support to the poor and vulnerable. We need to invest in what works and fix what doesn’t. And as we do, we always need to keep in mind that this work is ultimately about empowering people.”

Taking a critical look at the regional perspectives on MDGs, the World Bank says although SSA countries are off-track on most MDGs, the region has made important gains. Over the past decade, the poverty rate has declined at about one percentage point a year - from 58 per cent in 1995 to 51 per cent in 2005, with most of the decline occurring over the past decade.

Before the crisis, SSA demonstrated the fastest regional progress in primary school completion from 53 per cent to 65 per cent between 2000 and 2008. Several countries had improvement in completion rates of 50 per cent or higher, although admittedly from a low base. SSA countries have also made progress in closing the gender gap in primary school enrollment.

While progress on health MDGs has lagged, evidence indicates that child mortality, after stagnating for some time, had begun to fall sharply before the crisis. Ethiopia, Gambia, Malawi, and Rwanda saw declines of 25 to 40 per cent in under-five mortality during 2000-08.
 

The crisis could stall hard-won progress or could make it harder to sustain gains.

The poverty rate is now expected to fall to 38 per cent by 2015, not 36 per cent. This will leave an additional 20 million people in extreme poverty in 2015 and under-five mortality might fall more slowly: to 139.5 per 1,000 (post-crisis trend) instead of the pre-crisis trend of 129.2 per 1,000. [monitor.co.ug]

Commodity News Snapshot-Pakistan

3,500 tons of wheat supplied to Gilgit-Baltistan

ISLAMABAD (September 02, 2010): The government has supplied 3,500 tons of wheat by air to Gilgit-Baltistan (GB) on the Prime Minister' special instructions to avert any possibility of food shortage in the area. Federal Minister for Food and Agriculture, Nazar Muhammad Gondal said this while chairing a meeting to review the food items supply and availability in the northern parts of the country, here on Wednesday.

Pakistan producing over 40 types of fruits and vegetables: speakers

FAISALABAD (September 02, 2010): Speakers in a workshop on " Sustainable Management of Insect pests of fruits with special reference to citrus through modern protection and post harvest losses reduction techniques" said that Pakistan is producing more than 40 types of fruits and vegetables which have none to compare in the world with respect to taste and quality. But unfortunately we have also credit of using pesticides non-judicious.

Sugar stocks: MoI&P, PSMA presenting contradictory figures

ISLAMABAD (September 02, 2010): Ministry of Industries and Production (MoI&P) and Pakistan Sugar Mills Association (PSMA) are presenting contradictory figures with respect to sugar stocks held by mills, informed sources revealed to Business Recorder. According to the MoI&P, stocks with the mills were 536,326 tons as of August 31, 2010 whereas PSMA claims the stocks with its members mills were less than 0.4 million tons.

Wheat planting season: FAO asks world community for more funds

ISLAMABAD (September 02, 2010): United Nations Food and Agriculture Organisation (FAO) has asked international community to give more funds as wheat planting season is fast approaching in Pakistan where floods have destroyed country's most of the wheat seed stocks. Wheat, is staple food of the country, which is planted from September to November and more than half a million tonnes of wheat seed stocks have been destroyed by the floods, said a FAO report released here on Wednesday.

Growers condemn increase in diesel prices

LAHORE (September 02, 2010): Growers' organisations strongly reacting to the increase in diesel prices have said it will bring already hard hit farmers under further financial burden making it impossible to utilise machinery in agriculture. Agri-Forum Pakistan Chief, Muhammad Ibrahim Mughal while talking to Business Recorder said that around 3.5 billion liters of diesel was used by the growers and farmers in the agriculture sector.

Punjab agriculture board approves high priority research project

LAHORE (September 02, 2010): Punjab Agricultural Research Board (PARB) has approved a high priority research project 'improvement of value chains and tradability of farmer's produce' worth Rs 18.98 million. Approval of this project was given in 23rd meting of Board of Directors of the Punjab Agricultural Research Board (PARB) held here on Wednesday.

Official cotton spot rate cut to Rs 6,500 on improving weather

KARACHI (September 02, 2010): Official spot rate was lowered on the cotton market on Wednesday as floodwater is going into the sea, dealers said. The Karachi Cotton Association (KCA) official spot rate was dropped by Rs 50 to Rs 6,500, they said. In the ready business over 10,000 bales of cotton changed hands between Rs 6300-6800, they said.

Leather industry facing persistent decline in exports: Agha

LAHORE (September 02, 2010): The National Environmental Quality Standards (NEQS) which were fixed at level of 150 mg/liter chemical oxygen demand (COD) are unachievable for the leather industry thus the government should immediately provide interim relief and reduce the NEQ standards to rational level.

Thar coal ignored by federal government

Thar coal reserves have been lying in a state of neglect due to the federal government’s indecision, according to the Sindh government.

A lack of infrastructure and absence of proper incentives by the federal government are chiefly to blame.

The Sindh government has claimed that it has asked Islamabad to approve a comprehensive tax incentive package and become a partner in providing the required $1.8 billion of infrastructure for the mining of the Thar coal reserves according to sources in the water and power ministry, according to sources.

However, despite a number of meetings, the federal government has not reached any decision in this regard said the sources, adding that Finance Minister Hafeez Shaikh was reluctant to give a matching grant each year.

Sources also said that the Sindh government has also immediately sought Rs10 billion from the federal government. The amount was to be allocated equally towards the Makhi-Farsh water supply project for Thar and a transmission line scheme.

Regarding investment incentives, the Sindh government has sought a thirty-year corporate income tax and a minimum turnover tax exemption. The exemption is sought from the date of the first sale of lignite to power plants. All imports by mining projects should be allowed zero per cent customs duty to provide the same advantages as those provided to independent power producers, according to the Sindh government’s proposal. The proposal also seeks a waiver of withholding tax on dividends to shareholders and an exemption of WHT on the procurement of goods and services during project construction and operations. The incentive package remains to be approved by the Economic Coordination Committee of the cabinet.

The sources added that “unless Thar Coal projects are incentivized, it will not be possible to attract the capital required to achieve financial close”. Financial close is the time period required for the completion of all documentation and conditions necessary to initiate a project.

The provincial government also asked the federal government to match the contribution for infrastructure development, for support for project financing from multilateral donors and for the World Bank to rekindle its interest in the coal sector. Previously, the WB withdrew its assistance in exploring the Thar coal reserves.

“The development of infrastructure is critical for the development of Thar Coal Block II”, the Sindh government official added. The infrastructure development package consists of a water supply and an effluent disposal system for Thar mining and power generation projects costing $500 million, transmission lines worth a billion dollars, roads for heavy transportation costing $50 million and a railway network costing $200 million.

The Sindh government is developing Block II of Thar Coal reserves by initiating a joint venture with Engro Power Gen Limited. It has also established Sindh Engro Coal Mining Company and has 40 per cent stakes in it.  According to an official of the Sindh government, potential benefits of the Block II project could be enormous. “It would attract $ 20 billion of investment during next ten years and save $79 billion of reserves by replacing expensive oil with coal for power generation,” he claimed.

Thar Desert contains the world seventh largest coal reserves. The reserves have been estimated at 175 billion tons, equivalent to 50 billion ton of oil, which is more than Iran and Saudi Arabia combined oil reserves and enough to generate 100,000MW electricity for over 200 years. Pakistan’s current use of coal, despite having one of the largest reserves of lignite in the world, is extremely negligible. It produces 0.1 per cent of the total energy from coal as opposed to India’s 53 per cent and China 78 per cent. Instead, Pakistan produces 35 per cent electricity by using imported oil.

The need to mine the trillions of dollars worth coal reserves is compounded with the increasing demand and cost of energy. According to the government estimates, the energy shortage would increase drastically in the coming years from its existing peak level of 6577 megawatts to 18320 megawatts in 2015.

[Published in The Express Tribune]

A Trust Fund By ADB to Attract Donnars

ADB director general Juan Miranda has said on Friday while addressing a press conference that Pakistan needs more fund and ADB is planning to launch a Trust Fund for Pakistan for flood related reconstruction & rehabilitation programme in order to make it sure that funds would be transparently utilized in right directions.


In the absence of trust & transparency, A special trust Fund would be established by the Asian Development Bank that eventually attract International Donors for rehabilitation & reconstruction of flooded areas.

Through the trust fund, the ADB would extend an invitation to international and individual donors for grant finances to co-finance development projects using ADB’s “fiduciary capabilities”, he said.

Paper work would be completed in a much professional way and we will certify work before make final payments. The DG has said that we would make it sure that reconstruction & rehabilitation would be completed in 2-3 years with the help of donors money.

"A formal request to the international community would be made to contribute funds for reconstruction after completion of Damage Need Assessment (DNA) by October 15, 2010, he maintained. "Our team will continue reform agenda that would be good for economy," Miranda said while replying to questions on elimination of electricity subsidy and implementation of reformed GST programme under economic reforms.

Terms and conditions of the loan programme were yet to be negotiated with the Pakistan government but depending on projects, it would be a combination of soft and commercial loans.

Pakistan could make an international appeal for debt relief, adding that Pakistan's debt situation was not so bad and it would rely on the bilateral response to their appeal. Juan Miranda, DG, Central and West Asia Regional Department of the ADB after completing his visit, briefed the media on the bank's proposed lending of $2 billion for rehabilitation of Pakistan's flood victims. "We are here to help Pakistan in rehabilitation and reconstruction phases of flood victims, he said, adding that $2 billion lending would be disbursed in 12 to 30 months. He said reconstruction of flood-hit areas would take around two years.

He said the bank appreciated that reconstruction job was going to be mammoth and hence it has initially earmarked $2 billion new financing for the reconstruction. “This is the minimum that we have committed to get the people back to hope and dignity”.

Answering to a question that the ADB had only reallocated its already committed portfolio under the medium-term country assistance programme for Pakistan, Mr Miranda said the amount was kept for Pakistan but it had not been allocated for specific projects so far.

“This is new money” meant only for flood related reconstruction and rehabilitation”, he added. He said to ensure transparency in the utilisation of funds, the ADB would adopt similar procedures that were adopted during the reconstruction phase in 2005 earthquake in Pakistan.

It is to intricate at current stage to determine the overall economic losses unless damage assessment is completed however short term impact of flooding on Pakistan GDP is significant, he added.

Countering to a question, Mr Miranda said the multilateral agencies expected Pakistan to go ahead with the long-term economic reform agenda despite damages caused by the floods.

“We expect the economic reforms agenda will not be derailed because of short-term reconstruction work. The reforms should continue for long-term national goals”.

He warned winter season is fast approaching which should be taken into account as a large portion of the population is homeless. There is big task ahead to provide shelters, food, health facilities and sanitation. Miranda stressed the donor community to help for humanitarian relief. "We need to put back hope and dignity into people's lives and this is not the time to let them down," Miranda added.

The two billion dollars will be for emergency rehabilitation and reconstruction work. The funds will be released in accordance with the findings of DNA, which will examine damages in 16 core areas. ADB will take the lead in eight sectors, including transport and communication, energy, health, water and sanitation, irrigation, social protection and public administration services. ADB has already mobilized a team of over 100 experts to prepare the DNA [Damage Need Assessment].

Responding to a question if Pakistan should seek international debt forgiveness, Mr Miranda said Pakistan was not under terribly bad debt situation like many other countries were and hence it should not take such an option.

Meanwhile, the World Bank has agreed to enhance the amount of $900 million earlier committed through “reprogramming” to $1 billion for relief and reconstruction work.

A World Bank mission led by Xian Zhu, operations director of the bank, had a meeting with Finance Minister Dr Abdul Hafeez Shaikh and said that out of this amount, $700 million shall be available for floods related early recovery and reconstruction projects, while an amount of $300 million shall be used for financing flood related imports.