The World Bankdocuments1.worldbank.org/curated/en/...July 1 – June 30 CURRENCY EQUIVALENTS (Exchange Rate Effective as of March 31) Currency Unit PKR 163.35 = US$1.00 US$1.00 = SDR

The World Bank

Securing Human Investments to Foster Transformation (SHIFT) DPF Series (P170568)

Document of

The World Bank

FOR OFFICIAL USE ONLY

Report No: PGD140

INTERNATIONAL DEVELOPMENT ASSOCIATION

PROGRAM DOCUMENT FOR A

PROPOSED DEVELOPMENT POLICY CREDIT

IN THE AMOUNT OF SDR 366.4 MILLION (US$500 MILLION EQUIVALENT) TO

ISLAMIC REPUBLIC OF PAKISTAN

FOR THE

FIRST PROGRAMMATIC SECURING HUMAN INVESTMENTS TO FOSTER TRANSFORMATION

DEVELOPMENT POLICY FINANCING

May 8, 2020

Education Global Practice Health Nutrition and Population Global Practice Social Protection and Jobs Global Practice Social Urban, Rural and Resilience Global Practice South Asia Region

This document has a restricted distribution and may be used by recipients only in the performance of their official

duties. Its contents may not otherwise be disclosed without World Bank authorization.

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The World Bank


Islamic Republic of Pakistan

GOVERNMENT FISCAL YEAR

July 1 – June 30

CURRENCY EQUIVALENTS

(Exchange Rate Effective as of March 31)

Currency Unit

PKR 163.35 = US$1.00

US$1.00 = SDR 0.7327

Regional Vice President: Hartwig Schafer

Country Director: Patchamuthu Illangovan

Regional Director: Lynne D. Sherburne-Benz

Practice Manager (s): Mario Cristian Aedo Inostroza

Task Team Leader (s): Cristina Isabel Panasco Santos, Tazeen Fasih

ABBREVIATIONS AND ACRONYMS

ADB Asian Development Bank BOP Balance of Payments BISP Benazir Income Support Program CAD Current Account Deficit CCT Conditional Cash Transfer COVID-19

Coronavirus Pandemic 2019

CNIC Computerized National Identity Card CPEC China Pakistan Economic Corridor CPS Country Partnership Strategy CRC Child Registration Certificate CRVS Civil Registration and Vital Statistics DCP3 Disease Control Priority – Edition 3 DPF Development Policy Financing

ECNEC Executive Committee of the National Economic Council

EFF Extended Fund Facility

ECNEC Executive Committee of the National Economic Council

EPI Expanded Program on Immunization FDI Foreign Direct Investment

FRDLA Fiscal Responsibility and Debt Limitation Act

GDP Gross Domestic Product GOP Government of Pakistan HC Human Capital HCI Human Capital Index

IBRD International Bank for Reconstruction and Development

IDA International Development Association

IFC International Finance Corporation IMF International Monetary Fund

IPEMC Inter-Provincial Education Ministers Conference

IT Information Technology LDP Letter of Development Policy MFEPT Ministry of Federal Education and

Professional Training

MNHSRC Ministry of National Health Services Regulations and Coordination

MPDSI Ministry of Planning Development and Special Initiatives

MTEF Medium-Term Expenditure Framework MOF Ministry of Finance

NADRA National Database and Registration Authority

NEP National Education Plan NISP National Immunization Support Project NSER National Socio-Economic Registry NSSP National Social Protection Project

PEFA Public Financial Management and Accountability Assessment

PER Public Expenditure Review PFM Public Financial Management PKR Pakistani Rupee PTA Pakistan Telecommunications Authority RFI Rapid Financing Instrument

RISE Resilient Institutions for Sustainable Economy

SBP State Bank of Pakistan SDR Special Drawing Rights

SHIFT Securing Human Investments to Foster Transformation

SOE State-Owned-Enterprise TSA Treasury Single Account UC Union Council UCT Unconditional Cash Transfer UHC Universal Health Coverage WB World Bank WBG World Bank Group WeT Waseela-e-Taleem

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ISLAMIC REPUBLIC OF PAKISTAN

SECURING HUMAN INVESTMENTS TO FOSTER TRANSFORMATION (SHIFT) DPF SERIES

TABLE OF CONTENTS

SUMMARY OF PROPOSED FINANCING AND PROGRAM........................................................................3

1. INTRODUCTION AND COUNTRY CONTEXT ...................................................................................6

2. MACROECONOMIC POLICY FRAMEWORK ....................................................................................8

2.1. RECENT ECONOMIC DEVELOPMENTS ............................................................................................ 8

2.2. MACROECONOMIC OUTLOOK AND DEBT SUSTAINABILITY ........................................................ 11

3. GOVERNMENT PROGRAM ........................................................................................................ 21

4. PROPOSED OPERATION ............................................................................................................ 22

4.1. LINK TO GOVERNMENT PROGRAM AND OPERATION DESCRIPTION .......................................... 22

4.2. PRIOR ACTIONS, RESULTS AND ANALYTICAL UNDERPINNINGS .................................................. 24

4.3. LINK TO CPF, OTHER BANK OPERATIONS AND THE WBG STRATEGY .......................................... 39

4.4. CONSULTATIONS AND COLLABORATION WITH DEVELOPMENT PARTNERS ............................... 40

5. OTHER DESIGN AND APPRAISAL ISSUES .................................................................................... 40

5.1. POVERTY AND SOCIAL IMPACT .................................................................................................... 40

5.2. ENVIRONMENTAL ASPECTS ......................................................................................................... 43

5.3. PFM, DISBURSEMENT AND AUDITING ASPECTS .......................................................................... 44

5.4. MONITORING, EVALUATION AND ACCOUNTABILITY .................................................................. 46

6. SUMMARY OF RISKS AND MITIGATION ..................................................................................... 46

ANNEX 1: POLICY AND RESULTS MATRIX ........................................................................................... 50

ANNEX 2: FUND RELATIONS ANNEX ................................................................................................... 54

ANNEX 3: LETTER OF DEVELOPMENT POLICY ..................................................................................... 57

ANNEX 4: ENVIRONMENT AND POVERTY/SOCIAL ANALYSIS TABLE .................................................. 61

ANNEX 5: HUMAN CAPITAL INDEX – PAKISTAN ................................................................................. 63

ANNEX 6: WORLD BANK PROGRAM AND SHIFT POLICY REFORM ....................................................... 65

ANNEX 7: SAFETY NETS PROGRAMS IN PAKISTAN ............................................................................. 67

The Securing Human Investments to Foster Transformation (SHIFT) Development Policy Financing (DPF) series for the Islamic Republic of Pakistan was prepared by the International Development Association (IDA) team lead by Cristina Isabel Panasco Santos (Program Leader, HSADR) and Tazeen Fasih (Lead Economist, HSAED) under the guidance of Illango Patchamuthu (Country Director, SACPK), Lynne Sherburne-Benz (Regional Director, HSADR), Cristian Aedo (Practice Manager, HSAED), Gail Richardson (Practice Manager, HSAHP), Stefano Paternostro (Practice Manager, HSASP), David Warren (Practice Manager, SSASO), Manuela Francisco (Practice Manager, ESAMU), Benu Bidani (Practice Manager, ESAPV), and Melinda Good (Operations Manager, SACPK).

The team consisted of Juan Baron (Senior Education Economist, HSAED), Karthika Radhakrishnan (Operations Officer, HSAED) Neelam Ejaz (Operations Analyst, HSAED), Aliya Kashif (Senior Health Specialist, HSAHP), Yi-Kyoung Lee (Senior Health Specialist, HSAHP), Robert Oelrichs (Senior Health Specialist, HSAHP), Maletela Tuoane-Nkhasi (Senior Health Specialist, HHNGF ), Jahanzeb Sohail (Economist, HSAHP), Shaza Khan (Operations Analyst, HSAHP), Amjad Khan (Senior Social Protection Specialist, HSASP), Nina Rosas (Senior Economist, HSASP), Maria Beatriz Orlando (Lead Social Development Specialist, SSAS1), Uzma Quresh (Social Development Specialist, SSAS1), Noor Rahman (Consultant, SSAS1), Najm-Ul-Sahr Ata-Ulla (Senior Social Development Specialist, SSAS1), Marcelo Acerbi (Senior Environmental Specialist, SMNEN), Takeaki Sato (Senior Environmental Specialist, SSAEN), Sana Ahmed (Environmental Specialist, SSAEN), Silvia Redaelli (Senior Economist, ESAPV), Enrique Blanco Armas (Lead Economist, EECM2), Saiyed Shabih Ali Mohib (Program Leader, ESADR), Muhammad Waheed (Senior Economist, ESAMU), Adnan Ashraf Ghumman (Economist, ESAMU), David I (Senior Financial Management Specialist, ESAG1), Victor Ordonez (Senior Finance Officer, WFACS), Ria Dharmawan (Counsel, LEGES), Ehtesham-ul-Haq (Operations Analyst, SACPK), and Zulfiqar Ali Raza (Senior Program Assistant, SACPK). The team was supported by Theo David Thomas (Economic Adviser, OPSCE), Sona Varma (Economic Adviser, OPSCE), and Kamer Karakurum Ozdemir (Senior Economist, OPSCE).

https://intranet.worldbank.org/people/profile/000187733

https://intranet.worldbank.org/people/profile/000400289

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SUMMARY OF PROPOSED FINANCING AND PROGRAM

BA BASIC INFORMATION

Project ID Programmatic If programmatic, position in series

P170568 Yes 1st in a series of 2

P Proposed Development Objective(s)

The development objective of the proposed series is to (i) strengthen CRVS, health and education systems essential for HC accumulation; (ii) recognize the contribution of women to economic productivity; and (iii) improve national safety nets to respond to shocks in a more efficient manner.

Organizations

Borrower: ISLAMIC REPUBLIC OF PAKISTAN

Implementing Agency: MINISTRY OF FINANCE, BENAZIR INCOME SUPPORT PROGRAM - BISP, MINISTRY OF PLANNING DEVELOPMENT AND SPECIAL INITIATIVES, MINISTRY OF FEDERAL EDUCATION AND PROFESSIONAL TRAINING, MINISTRY OF NATIONAL HEALTH SERVICES REGULATIONS AND COORDINATION

PROJ PROJECT FINANCING DATA (US$, Millions)

SUMMARY

Total Financing 500.00

DETAILS

International Development Association (IDA) 500.00

IDA Credit 500.00

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INSTITUTIONAL DATA

Climate Change and Disaster Screening

This operation has been screened for short and long-term climate change and disaster risks

Overall Risk Rating

High

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RESULTS

Indicator Name Baseline (2019) Target (2023)

Percentage of children age 5 years and under with a birth certificate 36% 41%

Percentage of children 12-23 months who received all basic vaccinations 66% 81%

Number of national learning assessments conducted 0 1

Percentage of home-based workers registered (federal and provincial)

of which female

0 20%

70%

Percentage of women working in shops, establishments and factories 10% 14%

Number of beneficiaries from COVID-19 safety nets response interventions (federal and provincial)

0 12 million

Number of beneficiaries of WeT program 2.8 million 4 million

Number of beneficiaries of nutrition sensitive CCTs (federal and provincial) 0

500,000

Number of households classified by welfare status and percentile in the

updated NSER 0 22 million

Percentage of BISP beneficiary families covered from the bottom two

quintiles

33% 70%

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IDA PROGRAM DOCUMENT FOR A PROPOSED CREDIT TO ISLAMIC REPUBLIC OF PAKISTAN

1. INTRODUCTION AND COUNTRY CONTEXT

1. The proposed operation – Securing Human Investments to Foster Transformation (SHIFT) – supports the Islamic Republic of Pakistan’s response and recovery from the impact of the COVID-19 pandemic on human capital (HC) and the economy. It supports more efficient and better targeted safety nets to protect the poor and vulnerable and prevent losses of HC. It will enhance HC accumulation as well as the recognition of women’s contribution to economic productivity. The proposed SHIFT operation for SDR 366.4 million (US$500 million equivalent) is the first in a programmatic series of two operations that will strengthen the policies for achieving better HC outcomes in the medium to long term. SHIFT is aligned with the Government of Pakistan’s (GOP) Pakistan Preparedness and Response Plan to combat COVID-19, which focuses on, amongst others interventions: (i) scaling-up emergency response mechanisms to ensure a whole-of-country and whole-of-society approach; (ii) launching mass public awareness campaigns on COVID-19; (iii) delivering essential public health measures to contain the spread of the virus; (iv) enhancing the capacity of the health system; and (v) providing cash transfers, food rations and support educational activities. The programmatic series is consistent with the FY15-20 Country Partnership Strategy (CPS) and the World Bank Group’s (WBG) twin goals of boosting shared prosperity and ending extreme poverty. It is also consistent with the GOP’s social and economic reforms program.

2. Periodic macroeconomic crises and a low HC basis have constrained the country’s growth prospects. Over the last two decades, economic growth in Pakistan has averaged at 4.4 percent a year, below the South Asian annual average of 6.3 percent. Low investment in HC, slow progress of structural reforms, low private investment1, and slow export growth due to an overvalued currency, among others, have hindered growth prospects. With a population growth rate of 2.4, the country has seen a limited per capita real growth rate.

3. The country was making good progress in stabilizing its economy and implementing much needed structural reforms including in human capital. However, the global COVID-19 pandemic is impacting day-to-day life in Pakistan and will have significant negative impacts on the economy, decelerate progress towards stabilization, and jeopardize efforts towards HC accumulation. To curtail the spread of the coronavirus, most of the country has been placed under a partial lockdown, international flights and domestic rail travel have been suspended, and educational institutions across the country have been closed2. The closure of all non-essential businesses and disruption to the domestic supply chain are significantly affecting the services and manufacturing sectors, which account for nearly 80 percent of total GDP. The impact of the ongoing economic disruption is expected to contract GDP by 1.3 percentage points in FY20. In sum, COVID-19 sets back Pakistan’s economy.

4. There was a consistent and significant decline in poverty in Pakistan over the 14 years from 2001 to 2015, during which the poverty headcount measured using the national poverty line fell from 64.3 percent to 24.3 percent. The increase in employment opportunities outside the agriculture sector was the main driver of poverty reduction over

1 Approximately 10 percent of Gross Domestic Product (GDP) on average in the last decade, which is less than half of the South Asian average. 2 These measures have been announced on a temporary basis but are subject to extension based on the evolving situation in the country.

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this period. This was made possible by the expansion of economic opportunities outside the agriculture sector, particularly with growth in male off-farm employment, and out-migration and its associated remittances. The latter boosted both household consumption and an increase in real wages. However, these gains are likely to be reversed due to the COVID-19 pandemic and its associated containment measures. The economic contraction is expected to determine a sizeable increase in poverty, reversing the trend of sustained poverty reduction observed over the past 20 years. Urban workers employed in the informal sector and daily wage workers employed in the formal sector will bear the brunt of the slowdown. In rural areas, expected decline in off-farm employment opportunities is also likely to increase vulnerability to shocks of households relying on agriculture. Hence, it is important that the government introduces policies and prioritizes investments that ensure poverty reduction and human capital losses are quickly offset to bounce back strongly.

5. Pakistan’s human capital is low in part due to the country’s high fertility rates and low health and educational attainment levels. According to the WB Human Capital Index (HCI)3 if no changes in HC accumulation take place, on average a Pakistani child born today is expected to be only 40 percent as productive as s/he would otherwise be at the age of 18, and this would be far worse in lagging regions and across gender (Annex 5 provides detailed information on disaggregated HCI for Pakistan). The gender gap is also seen in the current participation of women in the labor force. Male labor force participation is three times higher than female, which is only 26.3 percent. Pakistan has a well-established federal safety net program – the Benazir Income Support Program (BISP). The database used for targeting beneficiaries - NSER is being updated to address errors of exclusion and inclusion and system inefficiencies to further encourage demand for education and health services and to improve coordination between federal and provincial safety net programs aiming at facilitating government to respond to COVID 19 pandemic and any such further socio- economic shocks.

6. A comprehensive poverty alleviation program, Ehsaas (in Urdu, compassion)4 was launched a year ago. The program consolidates the role of safety nets in protecting the most vulnerable. Ehsaas includes HC investments that focus on improving health care, nutrition and education, supporting women and youth employment and entrepreneurship. Ehsaas is the main mechanism by which the government is responding to the impact of COVID-19 on the poor and vulnerable.

7. The World Bank is taking a comprehensive approach to human capital, following the Moving the Needle exercise and the two Human Capital summits in 2019 and 2020. The proposed program takes a unified view of supporting the federation through a human life cycle approach. At the federal level, SHIFT will support important policy reforms that will strengthen the stewardship role of the federal government and support provincial governments to deliver better services. Concurrently, the Bank in its pipeline and portfolio includes results-based operations in higher education, education, social protection, and health systems. At the provincial level, integrated human capital projects spanning health, education and social protection are being implemented in Punjab and being prepared for Khyber Pakhtunkhwa, Balochistan and Sindh.

3 WB launched the Human Capital Index in 2018. The Index measures the amount of HC a child born today can expect to attain by age 18. It conveys the productivity of the next generation of workers compared to a benchmark of complete education and full health. Pakistan is an early adopter of the HC project.

4 http://www.pakistan.gov.pk/ehsaas-program.html

http://www.pakistan.gov.pk/ehsaas-program.html

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8. The World Bank’s rapid response to the COVID-19 crisis in Pakistan comprises the Pandemic Response Effectiveness in Pakistan project (PREP, US$200 million) and eight ongoing projects that quickly mobilized US$40 million for urgently needed equipment and supplies. The second phase of the COVID-19 rapid response is currently underway, which focuses on interventions to mitigate socio-economic impacts. This includes repurposing and restructuring existing operations and aligning the design of proposed operations to prioritize COVID-19 related interventions as well as support for the medium-term reform agenda so that Pakistan can rebound stronger and quicker as the COVID-19 crisis subsides by supporting safety nets; public works, microenterprises and small businesses; digital economy; food security; and learning. The proposed SHIFT DPF includes actions that respond to the immediate needs and address medium-term reforms.

9. The proposed DPF series is anchored in the GoP program and is aligned with sectoral strategies at the federal and provincial levels. It supports policies in civil registration and vital statistics (CRVS), universal health coverage (UHC), especially primary health care, and equitable access to quality education, which are main contributors for HC accumulation. To recognize women’s contribution to economic productivity, the DPF series supports policies that improve working conditions for women and recognition of home-based work. In addition, SHIFT is fully aligned with the relevant areas under the National Action Plan for Coronavirus Disease. Further, the DPF supports protection of HC during the COVID-19 impact period through expansion of conditional and unconditional cash transfers, along with improved coordination and efficiency of safety nets at the national level.

2. MACROECONOMIC POLICY FRAMEWORK

2.1. RECENT ECONOMIC DEVELOPMENTS

10. Pakistan made considerable progress in restoring macroeconomic stability, but the COVID-19 pandemic has put a severe strain on the government’s fiscal position. Prior to the onset of the COVID-19 pandemic, the GoP had made considerable progress towards macroeconomic stabilization with support from the International Monetary Fund (IMF) through the Extended Fund Facility (EFF)5. To reduce the fiscal deficit, the government lowered the threshold of income taxes, withdrew tax exemptions for major sectors of the economy, and increased valuation rates for properties. To narrow the current account deficit, the State Bank of Pakistan (SBP) adopted a market determined exchange rate, increased the policy rate by 575 basis points, and stopped lending to the government to finance the budget deficit. As a result, the government had achieved a primary fiscal surplus of 0.7 percent of GDP in H1FY20 compared to a primary deficit of 0.4 percent of GDP in H1FY19, and the current account deficit had narrowed from 3.5 percent of GDP in Jul-Feb FY19 to 1.1 percent of GDP in Jul-Feb FY20. However, since the COVID-19 pandemic broke out in early 2020, economic activity has almost halted and trade flows have collapsed. Consequently, tax collections have seen a sharp decline and the government has increased spending on COVID-19 mitigation measures. Preliminary

5 The period of FY17-FY19 saw Pakistan’s current account and fiscal balances worsened due to a combination of consumption driven growth, an overvalued exchange rate, high volume of imports due to the China Pakistan Economic Corridor investments, coupled with a loose fiscal policy in the runup to the 2018 elections.

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data points to a severe contraction of the economy in the last quarter of FY206 and potentially a 2.5 percentage point of GDP increase in the fiscal deficit from the budgetary target. The COVID-19 pandemic has also elevated macroeconomic and fiscal risks to the outlook due to the impact of global disruptions on Pakistan’s economy.

11. The economy was picking up pace prior to the COVID-19 pandemic and measures to contain the pandemic are severely affecting economic activity. Real GDP growth (at factor cost) decelerated from 5.5 percent in FY18 to 3.3 percent in FY19. Leading indicators pointed towards a further slowdown in growth in the first eight months of FY20 as stabilization measures took effect. The output of large-scale manufacturing (that constitutes approximately 50 percent of industry) dropped by 3.4 percent in July-January FY20 compared to a contraction of 1.7 percent in July-January FY19. However, the COVID-19 containment measures, including partial lockdowns across most of the country; restrictions domestic and international travel, and the closure of non-essential businesses have brought economic activity to a near-halt in the country. These measures are severely impacting the services and industrial sectors, which constitute more than two-thirds of the GDP.

12. Headline inflation remained elevated due to the spike in food inflation. Average inflation increased to 11.8 percent during July-March FY20 (from 6.8 percent in the same period of the previous year) due to a brief surge in food inflation from supply side disruptions, upward adjustments in administrated prices, and the exchange rate depreciation pass-through. Food inflation increased to 14.6 percent during July-March FY20 compared to 3.3 percent in July-March FY19. Core inflation (non-food non-energy) during this period remained stable at 8.1 percent. From end-March, as the COVID-19 pandemic spread, core inflation slowed as domestic demand fell. This prompted the SBP to cut the policy rate by 425 basis points to 9 percent between March and April 2020. As a result, real interest rates are currently negative. However, according to the SBP, these cuts were necessary to complement other measures recently taken to support the economy, including its commitment to keep the market sufficiently liquid so that schemes to provide concessional financing to companies, among others, could be implemented.

13. The financial sector remained sound, but the COVID-19 pandemic has increased risks. Private sector credit grew by 4.8 percent between end June-2019 and April 3, 2020 while commercial banks invested in risk-free, high-yielding government papers. Overall, the soundness of the banking sector remained strong by end-December FY20. The Capital Adequacy Ratio (CAR) was at 17.0 percent, well above the minimum regulatory requirement of 11.3 percent, while gross and net Non-Performing Loans remained at 8.6 percent and 1.7 percent, respectively. However, the ongoing global pandemic and the sudden stop in economic activity are likely to have an adverse impact on financial sector activity and expose the sector to risks of loan defaults.

14. The SBP has taken measures to keep credit markets functioning and protect borrowers amidst the pandemic. In this regard, the SBP has instructed banks to defer the payment of principal on loans and advances by one year, (borrowers will, however, continue to pay the interest amount). The deferment of principal will not affect borrower’s credit history and will also not be reported as restructured/rescheduled in the credit bureau’s data. For more financially distressed borrowers, the SBP has relaxed the regulatory criteria for restructuring/rescheduling of loans. The loans that are re-scheduled/restructured within 180 days from the due date of payment will not be treated as defaults. In addition, the timeline for classification of “Trade Bills” has been extended from 180 days to 365 days.

6 The Government of Pakistan’s fiscal year runs from July to June.

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These measures primarily allow the real sector to preserve cash flows for their ongoing activities and provide incentives for banks to maintain committed credit flows or provide more credit, offer immediate relief and additional time to borrowers.

15. The current account deficit (CAD) narrowed considerably in FY20. Pakistan’s CAD was reduced due to the depreciation of the rupee and a slowdown in economic activity. The CAD narrowed to 1.1 percent of GDP during Jul-Feb FY20, compared to 3.5 percent of GDP in the same period in FY19. This was driven by a 17.5 percent (y-o-y) decline in imports, while exports also contributed by growing at 2.7 percent (y-o-y) during this period. The contraction in imports was seen across all sectors, notably petroleum, transport equipment, mineral products, chemical and textiles. Export growth was driven by primary commodities including rice, fruits, and meat and fish. Workers’ remittances also grew by 5.4 percent (y-o-y) during Jul-Feb FY20, but are expected to contract as the COVID-19 pandemic impacts the Gulf Cooperation Countries (GCC). Since the outbreak of the COVID-19 pandemic there has been a steep decline in trade related activities, except in imports of medical equipment needed to manage the outbreak.

16. Financial inflows from multilateral agencies financed the CAD and led to the buildup of reserves. At the beginning of FY20, the SBP’s gross reserves were US$9.3 billion, equivalent to 2.4 months of import coverage. Financial inflows from multilateral agencies and private investments financed the CAD. Multilateral disbursements increased in July to February FY20underpinned supported by the IMF EFF (US$1.4 billion) and the Asian Development Bank (ADB) (US$2.1 billion). Non-traditional bilateral creditors have retained their exposure and rolled over maturing debt equivalent to US$6.0 billion since the start FY20. Specifically, these rollovers include bilateral deposits of US$2.0 billion from China, balance of payments support loans of US$3.0 billion from the Kingdom of Saudi Arabia and US$1.0 billion from the United Arab Emirates. Foreign direct investment was US$1.8 billion during Jul-Feb FY20, with some contribution from the renewal of cellular companies’ licenses. Pakistan received US$3.5 billion inflows in government securities (mainly in short-term government securities) during Jul-Feb FY207 and amortized US$1.0 billion of Sukuks in December 2019. Together with the lower CAD, these developments allowed the SBP to rebuild international reserves. By early March 2020, Pakistan’s gross official reserves had increased to US$14.8 billion, equivalent to 4.0 months of import cover. However, since the outbreak of the COVID-19 pandemic, there have been significant outflows from government securities as foreign investors offloaded their positions- these amount to around 75 percent of the portfolio inflows received. As of April 3, 2020, SBP’s gross reserves (including cash reserve requirement and cash holdings) had increased to US$12.7 billion, equivalent to 3.4 months of import coverage.

17. The exchange rate depreciated as the SBP transitioned to a market determined exchange rate and the government has finalized amendments to the SBP Law to enhance its independence. The rupee depreciated cumulatively by 25.5 percent in FY19. In May 2019 the SBP transitioned to a market determined flexible exchange rate regime. During Jul-Feb FY20, the decline in the CAD and increased inflows resulted in the exchange rate appreciating by 5.7 percent. The Pakistan rupee (PKR) appreciation and high inflation differentials viz e viz trading partners and comparators resulted in 9.5 percent appreciation in REER between Jul-Feb FY20. However, the recent volatility in global financial markets from the COVID-19 pandemic and outflow of portfolio investment from Pakistan (both from equity markets and government securities), contributing to a 7.6 percent depreciation in PKR since end-February

7 Short-term government treasury bills (T-bills) have maturity of 3,6, and 12 months.

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2020. As part of the EFF, the government has committed to amend the SBP Act to institutionalize the inflation targeting framework, enhance autonomy of the SBP, and improve governance arrangements. This amendment to the SBP Act has been drafted and is expected to be presented to Parliament for approval by end-May 20208.

18. Prior to the onset of the COVID-19 pandemic, the fiscal deficit had reduced. In FY19, the fiscal deficit was 8.9 percent of GDP. In order to reduce the fiscal deficit, the government rolled back tax exemptions granted to export oriented industries, lowered the personal income tax threshold, and increased the land valuation for the purpose of taxation in the FY20 Finance Bill. As a result, the fiscal deficit stood at 2.3 percent of GDP in H1FY20 compared to 2.7 percent of GDP in H1FY19. The primary balance also recorded a surplus of 0.7 percent of GDP in H1FY20, compared to a primary deficit of 0.4 percent in H1FY19. The Public Sector Development Program (PSDP) expenditure increased by 28.1 percent (y-o-y) in H1FY20, with recoveries in both federal and provincial PSDPs by 48 percent and 30.8 percent respectively. While the government was on track to achieve its fiscal targets in FY20, the COVID-19 pandemic is likely to affect fiscal outcomes, both through a slower increase in revenues and increased expenditures to mitigate the impact of the unfolding economic crisis.

19. Public debt increased in FY19. Pakistan’s public debt (comprising of general government and State-Owned Enterprises (SOE) guaranteed debt) stood at 87.5 percent of GDP at end-June 2019—12.3 percentage points higher than end-June 2018. The debt level remained in breach of the Fiscal Responsibility and Debt Limitation Act (FRDLA) 2005 (amended in 2017) that mandates a reduction of total public debt to 60 percent of GDP by end-FY18.9 The large fiscal deficit, the upward revaluation of the existing external debt stock due to the PKR depreciation, and the government borrowing in excess of budgetary requirements10 led to higher debt levels in FY19. Both the external and the domestic public debt increased during FY19. However, more than four-fifths of the total increase in the external debt came from the depreciation of the PKR against the US dollar.

2.2. MACROECONOMIC OUTLOOK AND DEBT SUSTAINABILITY

20. The economy is projected to contract in FY20 and recover marginally in FY21 (Table 1)11. Real GDP is projected to contract by 1.3 percent in FY20, due to the monetary and fiscal tightening in the first three quarters of the fiscal year and the severe economic impact of the COVID-19 pandemic in the last 4 months of the fiscal year. The closure of all non-essential businesses and domestic supply chain disruptions are expected to have a significant impact on the services sector that constitutes around 60 percent of GDP. The drop in domestic and global demand is also expected to

8 Amendment in SBP act was an end-March 2020 structural benchmark for IMF EFF.

9 As per the FRDLA, public debt is defined as “debt of the government (including the Federal Government and the Provincial Governments) serviced out of the consolidated fund and debts owed to the International Monetary Fund (IMF) less accumulated deposits of the Federal and Provincial Governments with the banking system. As per this definition, debt stood at 75.2 percent at end-June 2019. The amendment to the FRDLA also stipulates a reduction of total public debt by 0.5 percent each year from FY19-FY23 and by 0.75 percent each year from FY24-FY33 after which, public debt would be maintained at a level of 50 percent of GDP or less.

10 Extra government borrowing remained in deposits with the banking system. At end-June 2019, government deposits with the banking system stood at PKR 3.2 trillion (8.3 percent of GDP) compared to deposits of PKR 1.9 trillion (5.5 percent of GDP) at end-June 2018. First Quarterly Report 2019-2020, State of Pakistan’s Economy State Bank of Pakistan

11 This macroeconomic framework has been prepared by the World Bank. The Government’s framework differs.

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compound the losses of the industrial sector that is hit by both supply and demand side shocks. The country’s main industrial sector – textiles and apparel – is highly exposed to COVID-19 outbreak related disruptions due to its labor-intensity. Private sector consumption and investment are expected to contract in FY20. Imports and exports are also projected to fall sharply in FY20. Growth is projected to recover marginally to 0.9 percent in FY21 as the fallout of the pandemic is projected to continue in H1FY21. Consumption is expected to grow moderately, while private investment is expected to continue contracting in FY21. A significant increase in economic activity is only expected from FY22 onwards, as domestic conditions improve, and global demand picks up as the impact of COVID-19 pandemic abates. Inflation is expected to average 11.8 percent in FY20 and to gradually decline thereafter.

Table 1: Key Macroeconomic Indicators, Pakistan FY2017 to FY2024

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FY2017 FY2018 FY2019 Pre-COVID Post-COVID

Real economy

Nominal GDP at market prices (in bn. of rupees) 31,922 34,619 38,559 44,057 42,440 46,987 52,073 57,584 63,511

Real GDP growth (at factor cost) 5.2 5.5 3.3 2.4 -1.3 0.9 3.2 4.5 4.9

Contributions:

Agriculture 0.4 0.8 0.2 0.3 0.2 0.3 0.4 0.5 0.5

Industry 1.0 1.0 0.3 0.2 -0.4 0.1 0.7 0.9 0.9

Services 3.8 3.7 2.8 1.9 -1.1 0.5 2.0 3.2 3.5

Real GDP growth (at market price) 5.6 5.8 3.3 2.4 -1.3 0.9 3.2 4.5 4.9

Private Consumption 8.5 6.8 4.1 0.3 -3.6 0.4 3.5 3.7 5.2

Government Spending (Current Expenditure) 5.3 8.6 10.0 -3.7 6.2 -4.5 -0.1 4.4 1.9

Gross Domestic Fixed Capital Formation (GDFCF) 10.3 7.1 -8.9 -3.9 -16.7 4.5 3.7 5.5 5.9

Private 4.4 4.8 -4.7 -5.6 -9.2 -1.5 2.5 5.9 6.6

Public 28.3 12.7 -18.4 0.5 -36.7 27.5 7.6 4.6 4.0

Exports of Goods and Non Factor Services -0.6 10.4 13.2 9.7 -19.7 -5.3 7.3 8.8 5.5

Imports of Goods and Non Factor Services 21.2 15.8 5.8 -11.0 -26.3 -7.7 4.8 2.9 5.1

Per Capita GDP (current US$) 1/ 1630.1 1652.0 1497.3

Consumer prices (period average) 4.2 3.9 7.3 11.8 11.8 9.5 6.0 5.0 5.0

Consumer prices (eop) 3.9 5.2 8.9

Fiscal sector

Revenue 15.5 15.1 12.7 15.8 14.0 15.0 16.6 17.2 17.4

Expenditures 21.3 21.6 21.6 23.2 23.6 22.8 22.5 22.5 22.0

Overall balance (excl. grants) -5.8 -6.5 -8.9 -7.3 -9.6 -7.8 -5.9 -5.3 -4.7

General Government Debt (incl. IMF obligations) 67.1 71.6 83.5 81.1 86.2 86.3 83.9 81.4 78.5

Foreign currency public debt 2/ 20.5 24.2 29.7 30.4 31.7 32.9 32.8 32.1 30.0

Domestic currency public debt 46.5 47.4 53.8 50.7 54.5 53.5 51.2 49.3 48.4

General govt. and govt. guaranteed debt (incl. IMF obligations) 70.0 75.2 87.5 85.3 90.5 90.2 87.5 84.7 81.6

Monetary Sector

Broad Money 13.7 9.7 11.3 - - - - - -

Credit to non-government 16.8 14.9 11.6 - - - - - -

Interest (key policy interest rate) 5.75 6.50 12.25 - - - - - -

Balance of payments

Current account balance (incl. transfers) -4.1 -6.3 -4.9 -2.2 -1.9 -2.0 -2.2 -2.3 -2.7

Exports of goods & services 9.0 9.6 10.4 11.5 9.1 8.1 7.9 7.8 7.8

Imports of goods & services 19.2 21.6 22.0 20.8 17.6 15.8 15.6 15.5 15.6

Capital and financial account 3.5 4.7 4.3 3.9 3.6 4.0 4.4 3.9 3.4

Foreign direct investment, net 0.9 1.1 0.6 0.7 0.6 0.7 0.8 1.0 1.3

Gross official reserves (in US$ million, eop) 3/ 17,550 11,341 9,262 13,821 13,666 18,307 23,944 28,025 28,860

Gross official reserves (in months of imports of G&S) 4/ 3.1 2.2 2.4 2.7 3.7 4.6 5.6 6.0 5.6

Net official reserves (in US$ million, eop) /5 16,144 9,766 7,280 12,421 12,166 16,807 22,444 26,525 27,360

Net official reserves (in months of imports of G&S) 4/ 2.9 1.9 1.9 2.5 3.3 4.2 5.2 5.7 5.3

Total external debt 6/ 27.4 30.3 37.6 41.8 43.4 44.0 43.7 42.7 40.8

Memo:

Crude oil, average ($/bbl) 7/ 52.8 68.3 60.0 58.0 30.3 39.8 42.3 45.1 48.0

Nominal GDP at market prices (in US$ billion) 304.6 314.6 282.5 - - - - - -

GDP, PPP (current international In US$ billion) 8/ 1091.3 1176.5

Workers' remittances (in US$ billion) 19.4 19.9 21.8 22.6 20.4 19.2 20.1 21.1 22.2

Sources: Pakistan authorities, World Bank Staff estimates

1/ National estimates.

2/ This includes medium and long term PPG debt as well as short-term external debt, IMF debt (both budget support and balance of payments support).

3/ SBP Gross Reserves including CRR and cashholdings

4/ In months of next year's imports of goods and services.

5/ SBP net reserves excluding CRR and cashholdings

6/ Total external debt is inclusive of medium and long term PPG debt as well as short-term external debt, IMF and private debt.

7/ Source: Commodity Markets Outlook, DECPG

8/ Source: WDI (as of August 11, 2019)

(Percentage change; unless otherwise indicated)

(In percent of GDP; unless otherwise indicated)


ProjectionsActual

(Percentage change; unless otherwise indicated)

FY2021 FY2022 FY2023 FY2024FY2020

21. The CAD is projected to remain sustainable over the medium term (Table 2), despite the impact of the COVID-19 pandemic on trade activities. The CAD is projected to narrow to 1.9 percent in FY20 due to a sharp contraction in imports. The adverse impact of the COVID-19 pandemic on export growth is expected to materialize in Q4-FY20 and H1FY21. The decline in global demand, coupled with global and domestic supply disruptions, is expected to keep export growth subdued. Exports are projected to start recovering in FY22 as the COVID-19 pandemic abates. The growth in exports is expected to be supported by the flexible exchange rate as well as reforms aimed at reducing the anti-export bias in tariff policy. Imports are also expected to recover slowly from FY22 onwards, as domestic industrial activity picks up. The impact of the COVID-19 pandemic on overseas workers and the negative economic impact of low oil prices on the GCC economies are expected to contract remittances in FY20 and FY21 by 6.5 percent and 6.0 percent respectively.

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Table 2: Key Balance of Payments (BOP) Indicators, Pakistan FY2017 to FY2024

FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024

i. Current Account -12,621 -19,897 -13,830 -5,000 -5,571 -6,756 -7,730 -9,722

A. Trade balance -26,680 -31,824 -28,517 -19,741 -19,336 -21,201 -22,650 -24,951

Export 22,003 24,768 24,251 19,643 18,268 19,501 21,013 22,694

Import 48,683 56,592 52,768 39,384 37,604 40,703 43,662 47,645

B. Services net -4,339 -6,068 -4,267 -2,500 -2,380 -2,411 -2,763 -3,039

C. Balance on Primary Income -5,048 -5,484 -5,709 -5,559 -6,087 -6,241 -6,618 -7,422

D. Balance on Secondary Income 23,446 23,479 24,663 22,801 22,231 23,098 24,300 25,690

of which Remittances 19,351 19,914 21,838 20,419 19,193 20,115 21,100 22,155

ii. Capital A/c 375 376 245 319 298 233 219 207

1. Balance from Current & Capital Accounts (i+ii) -12,246 -19,521 -13,585 -4,681 -5,273 -6,523 -7,511 -9,515

2. Financial A/c -10,198 -14,300 -11,933 -9,140 -10,920 -13,178 -12,655 -12,079

of which:

Direct investment -2,663 -3,461 -1,658 -1,610 -1,902 -2,559 -3,238 -4,697

Portfolio investment 250 -2,257 1,273 620 -1,896 -2,630 -2,530 -3,660

Net Acquisition of Financial Assets 1,180 273 -67 1,024 2,582 2,355 1,613 1,886

Net Incurrence of Financial Liabilities 8,965 8,855 11,481 9,174 9,704 10,344 8,500 5,608

3. Errors and omissions 102 -920 108 690 0 0 0 0

Overall balance (-1+2-3) -1,946 -6,141 -1,544 5,149 5,647 6,655 5,144 2,564

Use of fund credit and loans 102 -86 -376 -745 -1,006 -1,018 -1,063 -1,729

Gross SBP reserves 17,550 11,341 9,262 13,666 18,307 23,944 28,025 28,860

Net SBP reserves 16,144 9,766 7,280 12,166 16,807 22,444 26,525 27,360

Financing requirements 19,133 30,386 25,361 26,312 28,029 28,521 28,598 32,712

Current account deficit 12,621 19,897 13,830 5,000 5,571 6,756 7,730 9,722

Amortization 6,512 10,489 11,531 21,312 22,458 21,765 20,868 22,990

Financing sources 18,694 30,386 25,530 26,312 28,029 28,521 28,598 32,712

Memorandum Items

Current A/c Balance ( percent of GDP) -4.1 -6.3 -4.9 -1.9 -2.0 -2.2 -2.3 -2.7

Trade Balance (percent of GDP) -8.8 -10.1 -10.1 -7.5 -6.9 -6.9 -6.8 -6.9

Export growth percent 0.1 12.6 -2.1 -19.0 -7.0 6.7 7.7 8.0

Import growth percent 18.0 16.2 -6.8 -25.4 -4.5 8.2 7.3 9.1

Remittance growth percent -2.8 2.9 9.7 -6.5 -6.0 4.8 4.9 5.0

Capital & Financial A/c ( percent of GDP) 3.5 4.7 4.3 3.6 4.0 4.4 3.9 3.4

Source: World Bank Staff calculations and estimates

ProjectionActual

(In US$ million; unless otherwise indicated)

22. External balances are projected to remain manageable over the medium term, predicated on the successful rollover of short-term deposits from non-traditional bilateral financiers. While the CAD will remain moderate in the medium term, the amortization of external debt will remain high. The annual external financing needs are projected, on average, to be US$28.8 billion a year during FY20-FY24. Multilateral, bilateral and private debt-creating flows are projected to be the main financing sources. On May 1, 2020 the government requested its G20 creditors to activate the Debt Service Suspension Initiative, which allows for all official debt service obligations to G20 creditors to be suspended from May 1, 2020 to December 31, 2020. Discussions are ongoing between the authorities and creditors on the quantum of the debt suspension and modalities to implement the Initiative. The Government has committed to its G20 creditors that the additional fiscal space provided by the Initiative will be used to increase social, health and economic spending in response to the COVID-19 crisis. The SHIFT prior actions support this. On April 16, 2020 the IMF approved a Rapid Financing Instrument (RFI) equivalent to US$1.4 billion to help the authorities address the economic impact of

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the COVID-19. Similarly, the ADB has also committed to providing an additional US$800 million in FY20 to support the government’s efforts to mitigate the impact of the COVID-19 pandemic. Other lenders are also advancing their disbursements plans to support the government. This outlook also assumes that non-traditional bilateral financing partners (namely China, the Kingdom of Saudi Arabia and the United Arab Emirates) will roll over existing short-term loans to Pakistan for the duration of the IMF program. line with this, China has renewed bilateral deposits of US$ 2.0 billion in March, Kingdom of Saudi Arabia had refinanced BOP support loans of US$3.0 billion that matured between November and January (FY20) and the United Arab Emirates rolled over US$1.0 billion BOP support loans in March as well. The expected BOP financing requirements are presented in Table 3. In case the authorities are not able to secure continued rollover of these loans and extend the amortization period, macroeconomic risks will intensify.

23. Pakistan’s reserve coverage is projected to improve to 3.7 months of imports by end FY20 from 2.4 months of import coverage by end FY19. Pakistan’s international reserve accumulation is projected to be an outcome of the improvement in the external account as well as the rollover of non-traditional bilateral financing. The improvement in reserve adequacy is fragile and Pakistan remains below the IMF ARA reserve adequacy requirement over the medium term, only meeting the reserve requirement from FY24 onwards. Reserve adequacy will also be subject to SBP’s adherence to a market-based exchange rate regime.

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Table 3: BOP Financing Requirements and Sources, Pakistan FY2018 to FY202412

FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024

Financing requirements 30,386 25,361 26,312 28,029 28,521 28,598 32,712

Current account deficit 19,897 13,830 5,000 5,571 6,756 7,730 9,722

Amortization 10,489 11,531 21,312 22,458 21,765 20,868 22,990

Public Sector 5,789 7,358 17,223 19,397 17,737 14,773 15,383

To IMF 86 377 745 1,006 1,018 1,063 1,729

To other official creditors 4,163 4,444 12,632 10,485 7,824 4,770 7,954

To private creditors 1,488 1,537 2,846 7,906 7,895 7,940 4,700

To Eurobonds 52 1,000 1,000 - 1,000 1,000 1,000

Private Sector 4,700 4,173 4,089 3,061 4,028 6,095 7,607

Financing sources 30,386 25,530 26,312 28,029 28,521 28,598 32,712

FDI and portfolio investments 5,961 1,658 2,110 3,902 5,859 6,538 8,997

o/w: Eurobonds/Sukuk 2,500 - - 1,000 2,500 2,500 3,500

Capital grants 376 245 319 298 233 219 207

Short term debt disbursements 1,725 1,644 6,498 7,884 10,150 8,650 4,900

Long term debt disbursements 6,782 6,596 15,254 14,611 10,017 9,121 4,738

from IMF - 2,846 2,137 1,556 780 -

from Multilaterals 3,703 2,903 6,548 8,374 5,676 4,047 2,386

o/w IDA/IBRD 500 500 2,200 3,315 2,672 2,186 1,819

o/w ADB 50 50 3,500 2,350 1,300 1,750 700

from Bilaterals 3,079 3,693 5,860 4,100 2,785 4,294 2,352

Private Sector 7,569 3,784 6,490 6,881 8,817 9,214 16,334

Other financial flows 2,042 7,521 790 100 100 - 100

Drawdown in reserves 5,931 4,082 (5,149) (5,647) (6,655) (5,144) (2,564)


Actual

Note: The projection for FY20 assumes (i) disbursements of US$1.5 billion from the IMF under the RFI and of US$2.4 billion under

the EFF (this assumes that the 2nd and 3rd review of the EFF will be completed in FY20) (ii) World Bank to double SHIFT and

RISE DPFs (additional financing of US$750 million)

Projections

(in millions of US dollars; unless otherwise specified)

24. The fiscal deficit is expected to remain elevated in the medium-term as the government responds to the COVID-19 pandemic. The economic slowdown triggered by the COVID-19 outbreak is expected to significantly affect revenue collections in FY21-FY22. The government has announced a fiscal stimulus package of around US$7.5 billion in additional expenditure to mitigate the economic impact on businesses, as well as increase its spending on health and social protection expenditures. The fiscal cost of measures supported by this operation amount to approximately US$ 180 million (as per Bank analysis) and are included in the medium-term fiscal framework presented in Table 4. The medium-term fiscal framework also reflects the government’s fiscal stimulus and key reform measures, as described below:

• Revenue collection: Tax revenues are projected to fall to 10.9 percent of GDP in FY20, a decrease of 0.7 percentage points of GDP compared to FY19. The economic slowdown and disruptions caused by the COVID-19 pandemic are expected to result in a fall in tax revenue collection during April-June 2020. The non-tax revenues are projected to increase to 3.0 percent of GDP in FY20 compared to 1.1 percent of GDP in FY19. The

12 Projections do not factor in the G20 Debt Service Suspension Initiative.

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increase in non-tax revenues is coming from higher profits by SBP and receipts from the renewal of 4G license fees from telecommunication companies. Around 60 percent of the total target for non-tax revenues was collected in H1-FY20. Given the large volume of government debt held by the SBP and revaluation gains on its foreign exchange reserves due to the recent exchange rate depreciation, it is expected that the authorities will meet the overall target for FY20 through higher profits received from the SBP. Revenue growth is expected to remain subdued in FY21 as the economy gradually recovers from the COVID-19 pandemic. Revenue collection is expected to increase over the medium term as the economy recovers from the COVID-19 pandemic and the government implements structural reforms related to GST harmonization, rolls back tax expenditures, streamlines tax rates, eliminates different tax treatment accorded to agriculture income, and improves the withholding tax regime. Concurrently, the Pakistan Raises Revenue project will support the Federal Board of Revenue to administer taxes more effectively.

• Fiscal response to COVID-19 pandemic: The government has announced a fiscal stimulus package of approximately US$8 billion to: (a) support the medical health sector to combat the spread of virus and provide relief to those affected; (b) implement social welfare measures to support the poor and vulnerable whose livelihoods have been impacted by the economic slowdown and partial lockdowns across the country; and (c) provide stimulus to businesses and industries to protect productive assets during the economic downturn. However, it is estimated that only around US$2.5 billion is additional spending, as the remainder would be financed from savings on interest payments due to the recent reduction in interests rates, and re-appropriation from the existing budget, primarily from the Public Sector Development Program (PSDP) on account of underspending by some ministries. For the medical and relief efforts, the government has announced tax relief on food and medical equipment, along with additional funds to the National Disaster Management Authority (NDMA) for medical equipment and staffing. Furthermore, the Ehsaas program of the government has been

scaled up to provide monthly financial assistance to 10 million households over a period of 4 months. The government is also providing financing to Utility Stores Corporation and continuing with its wheat procurement exercise to ensure that adequate supplies of food at reduced prices are available during this crisis. In addition, a fund for daily laborers who have lost their earnings due to the economic slowdown has been announced. To stimulate the economy, a fund for small- and medium-sized enterprises (SMEs) has been established and reduction of PKR 15 per liter in petroleum products was announced. For exporters and businessmen, tax refunds are being expedited to help businesses maintain liquidity. A relief package for the construction sector was also announced to stimulate the construction sector and maintain employment for the daily workers.

• Strengthening fiscal management: The government remains committed to improve its core fiscal management functions. The Resilient Institutions for Sustainably Economy (RISE), a DPF operation being prepared in parallel to the SHIFT DPF series, has prior actions supporting measures to structurally improve fiscal management. These include the establishment of a Fiscal Policy Office and a unified Debt Management Wing in the Federal Government, and the harmonization of sales tax laws across the country. These measures are expected to improve the government’s capacity to manage its fiscal deficit sustainably, with a view to narrowing it over the medium to long term.

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FY2017 FY2018 FY2019 FY2020 FY2021 FY2022 FY2023 FY2024

Revenue and grants 15.5 15.2 12.8 14.1 15.1 16.7 17.3 17.5

Total Revenue 15.5 15.1 12.7 14.0 15.0 16.6 17.2 17.4

Tax revenue 12.4 12.9 11.6 10.9 12.6 14.2 14.7 14.9

Taxes on goods and services 4.8 4.9 4.4

Direct Taxes 4.2 4.4 3.7

Taxes on international trade 1.6 1.8 1.8

Other taxes 1.9 1.8 1.7

Nontax revenue 3.0 2.2 1.1 3.0 2.4 2.5 2.5 2.5

Grants 0.1 0.1 0.1 0.1 0.1 0.1 0.1 0.1

Expenditure 21.3 21.6 21.6 23.6 22.8 22.5 22.5 22.0

Current expenditure 16.3 16.9 18.4 20.5 19.1 18.7 18.6 18.3

Interest payments 4.2 4.3 5.4 6.4 6.1 5.9 5.7 5.5

Superannuation allowances & pension 1.0 1.0 1.0 1.0 1.1 1.1 1.2 1.1

Transfers (other than provinces) 1.1 1.1 1.1 1.3 0.9 0.9 1.1 1.0

Others 4.6 4.5 4.8 5.6 4.8 4.6 4.7 4.6

Provincial 5.4 6.0 6.0 6.3 6.0 6.1 6.1 6.0

Development expenditure & net lending 5.3 4.7 3.2 3.0 3.7 3.8 3.8 3.8

Statistical discrepancy -0.2 0.0 0.1 0.1 0.0 0.0 0.0 0.0

Overall balance (excluding grants) -5.8 -6.5 -8.9 -9.6 -7.8 -5.9 -5.3 -4.7

Overall balance (including grants) -5.8 -6.4 -8.8 -9.5 -7.7 -5.8 -5.2 -4.6

Financing 5.8 6.5 8.9 9.6 7.8 5.9 5.3 4.7

External 1.7 2.3 1.1 3.9 3.6 3.0 2.2 1.0

Of which : privatization receipts 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0

Domestic 4.1 4.3 7.9 5.7 4.2 2.9 3.1 3.7

Memo:

Primary balance (excluding grants) -1.6 -2.2 -3.5 -3.2 -1.6 0.0 0.4 0.8

Primary balance (including grants) -1.5 -2.1 -3.4 -3.1 -1.5 0.1 0.5 0.9


ProjectionsActual


25. Pakistan’s public debt-to-GDP ratio13 is projected to increase in FY20 before gradually declining thereafter. Debt sustainability risks have risen with an increase in debt levels, partly as a result of the PKR depreciation. The fiscal deficit (excluding grants) is projected to widen to 9.6 percent of GDP in FY20 due to increased outlays to support the economy against losses faced because of the on-going COVID-19 pandemic and lower revenue collections. The fiscal deficit will remain elevated at 7.8 percent of GDP in FY21 as the impact of COVID-19 pandemic persists in the first half of FY21 but will start to decline from FY22 onwards. As a result, under the baseline scenario, public debt is projected to increase from 87.5 percent of GDP in FY19 to 90.5 percent by FY20 and then decline to 81.6 percent of GDP by FY2414

13 Public sector is defined as general government and includes public guarantees, defined as guarantees to PSEs

14 As part of RISE DPF-I, PA4, the government will absorb PHPL debt into general government debt to increase transparency. Currently, PHPL debt is part of overall public sector debt as it is included in guarantees issued to State-Owned Enterprises. Thus, this transfer of PHPL debt to general government debt will change the structure of debt but not the overall level of public debt. However, the outstanding CPPA-G debt of around 2 percent of GDP is not included in public and publicly guaranteed debt (PPG) and its absorption will increase PPG debt.

Table 4: Key Fiscal Indicators, FY2015 to FY2024

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(See Figure 1 for the projected debt path and Figure 2 for a decomposition of debt dynamics). Moderately higher economic growth and declining primary deficits are expected to support the decline in public debt beyond FY22. Gross financing needs will remain sizeable throughout the projection period because of maturing debt to multilateral and bilateral creditors, Eurobond bullet maturities15 and repayments of the previous IMF EFF completed in September 201616. Debt management will improve through structural reforms, which include: i) the creation of an integrated Debt Management Office, ii) the publishing of a medium-term debt management strategy, iii) making issuance of guarantees to SOEs contingent on publication of audited financial statements, iv) the transfer of retail debt issuance to Debt Management Office (DMO), and v) the annual publication of a Debt Sustainability Analysis (DSA).

Figure 1: Public Debt Sustainability Analysis Figure 2: Contribution to Change in Public Debt Levels (FY18-FY24)

26. External debt sustainability risks have increased and will remain elevated under the baseline scenario. The external debt-to-GDP is projected to increase from 37.6 percent in FY19 to 44.0 percent in FY21 before declining to 40.8 percent by FY24. This is primarily due to elevated debt creating flows (from multilateral and bilateral partners) and expected Eurobond issuances to finance the upcoming amortizations. The external debt is quite vulnerable to exchange rate shocks, with a one-time 30 percent real depreciation of the PKR increasing the external debt to GDP ratio to 70.1 percent by end-June FY21, which is 26.1 percent of GDP higher than the base case (Figure 3).

15 Baring FY21, US$1 billion Eurobonds/Sukuk mature each year during the projection horizon.

16 Average payments of US$1,112 million are expected during the projection horizon.

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Figure 3: External Debt Sustainability Analysis

27. The economic outlook faces considerable downside risks and the restoration of macroeconomic stability hinges upon the implementation of ambitious structural reforms and the duration and impact of COVID-19 pandemic. The adjustment measures undertaken by the government during FY19 and FY20 have resulted in a narrowing CAD and buildup of external buffers. However, considerable downside risks remain. The uncertainty surrounding the COVID-19 pandemic, its duration and the economic impact of containment measures around the world, poses the highest risk to this outlook. An extended period of weaker global growth, disruptions in industrial supply chains due to the COVID-19 pandemic, further turmoil in international oil prices, and difficulty in rolling-over bilateral external debt from non-traditional donors (China, Kingdom of Saudi Arabia and United Arab Emirates) are additional external risks. Domestic risks stem from potential difficulties in implementing the necessary adjustments and structural reforms. If these downside risks materialize, the country can experience a contraction of 2.2 percent of real GDP in FY21. The immediate challenge for the government will be to contain the spread of the COVID-19 pandemic and minimize the economic losses, as well as protect the social and economic wellbeing of the affected and vulnerable population. In the medium to long term, the government should refocus on the implementation of the needed structural reforms, including reforms to improve debt management and enhance transparency, secure a longer repayment profile for short term loans from non-traditional bilateral creditors, implement the circular debt reduction strategy in the power sector, and implement competitiveness reforms to encourage private investment to increase.

28. The macroeconomic policy framework is considered adequate to proceed with this operation based on the stabilization measures implemented to-date and continued support by the IMF EFF program. This macroeconomic

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outlook is consistent with the macroeconomic framework underpinning the IMF EFF program, which is on track17. The COVID-19 outbreak will have a significant impact on economic outcomes, but the authorities are taking the necessary steps to mitigate the impact of the crisis while maintaining macroeconomic stability. The mix of prudent policies to manage the crisis combined with additional financing made available by Pakistan’s multilateral development partners (including US$1.4 billion from the IMF-RFI, US$800 million from the ADB, and financing from this DPF) will support Pakistan’s efforts to weather the crisis and continue with the implementation of crucial structural reforms. The adoption of a more prudent monetary policy has already resulted in a decrease in external pressures and a gradual recovery in international reserves. The reserve coverage is projected to reach 3.7 months of imports by the end of FY20. The fiscal slippage in FY19 was largely due to one-off deviations and fiscal outcomes are projected to gradually improve from FY21 onwards, supported by ongoing reforms in tax policy and administration as well as a tighter fiscal stance. External balances are expected to improve as exports pick up over the medium-term, led by a supply response to the more competitive exchange rate. The monetary policy framework is being strengthened, including amendments to the SBP Law, the introduction of administrative measures to increase SBP autonomy, and the formation of an independent monetary policy committee. Debt management is being improved, with the consolidation of functions in an integrated Debt Management Office. The World Bank is providing technical assistance in a number of these areas (tax policy and administration, fiscal and debt management, trade and competitiveness) to continue the strengthening of institutional capacity for improved economic management.

3. GOVERNMENT PROGRAM

29. The Government is implementing Ehsaas, the flagship program to protect the poor and vulnerable and to support core foundations of HC. Ehsaas is organized under four pillars: I. Addressing elite capture and making the government system work for equality; II. Safety nets; III. HC development; and IV. Jobs and livelihoods. Under Pillar I, it includes actions on improving quality of data and statistics including a quality CRVS system. Under Pillar II, it aims at making the NSER a dynamic database, along with a series of other interventions focusing on housing and social insurance for the poor, and welfare interventions for the disabled, elderly, informal workers and migrants. Under Pillar III, the program includes a set of initiatives to reduce malnutrition and support UHC, as well as expansion of education conditional cash transfers (CCTs) as a means to generate demand for social services including for girls. Pillar IV focuses on access to asset transfers and interest free loans, vocational training, skills enhancement, women empowerment programs and policy reforms to recognize women’s contribution to the labor force, whether in rural activities or home-based work.

30. Federal level and provincial response measures in education and health are being rolled out. The Ministry of

Federal Education and Professional Training (MFEPT) has embarked on reforms to reduce learning poverty18 and the

17 https://www.imf.org/en/News/Articles/2020/04/16/pr20167-pakistan-imf-executive-board-approves-disbursement-to-address-covid-19

18 Learning poverty is defined as the percentage of children not being able to read and understand a short age-appropriate text by age 10.

https://www.imf.org/en/News/Articles/2020/04/16/pr20167-pakistan-imf-executive-board-approves-disbursement-to-address-covid-19

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number of out-of-school children19, and decrease inequity in education by focusing on learning standards, assessments, and a uniform curriculum applicable to all schools in the country, including private and religious education. The Ministry of National Health Services, Regulations and Coordination (MNHSRC) has made universal health coverage its mains priority along with the launch of a medium-term framework for standardization of basic primary health care packages across the nation. Finally, acknowledging the challenges of harmonizing CRVS services at the local, provincial and federal levels, the Ministry of Planning, Development and Special Initiatives (MPDSI) established the Technical Support Unit – CRVS to lead the reforms to harmonize and consolidate CRVS services. Given that social sectors are devolved, provinces have produced sectoral plans and strategies. In education, decreasing the number of-out-school children, reducing the gender gap in access and quality, and addressing equity are core priorities in all provincial strategic sectoral documents. Similarly, ensuring primary health care for their population is a core priority for all provinces. Gender empowerment actions are also part of all provincial government plans.

31. The COVID-19 pandemic has already had social and economic consequences, especially for the poor and vulnerable and the government launched an Ehsaas Cash Assistance Package to mitigate the impact of the pandemic. The government package has three components which will include 12 million more families in the program over a period of four months from April to June 2020. The first component[1] will provide a top up of PKR 1,000 (US$ 6) per month to the existing 4.5 million families who are part of the regular safety net response and are currently receiving a benefit of PKR 2,000 (US$ 12) every month. The second component will identify and include another 4 million families by raising the Proxy Means Test (PMT) score and will disburse PKR 3,000 (US$ 18) per month for a period of 4 months. The third component will make provision for an additional 3.5 million vulnerable families who have not otherwise been identified to register appeals with the local administration. These appeals will be filtered through NADRA and NSER to avoid overlap with the earlier two interventions and verified families will provide PKR 3,000 (US$ 18) per month for four months. Provinces have also decided to provide cash transfers to poor and daily wagers that may be affected by the crisis. This requires coordination between provincial governments, BISP and NADRA and the policy reform supported under Pillar C of this operation support BISP, in coordination with the provinces, to deliver on the COVID-19 response.

4. PROPOSED OPERATION

4.1. LINK TO GOVERNMENT PROGRAM AND OPERATION DESCRIPTION

32. The development objective of the proposed series is to (i) strengthen CRVS, health and education systems essential for HC accumulation; (ii) recognize the contribution of women to economic productivity; and (iii) improve national safety nets to respond to shocks in a more efficient manner. Accordingly, the policy program is organized under three pillars:

19 Pakistan has the second highest population of out-of-school children in the world with close to 22 million individuals out-of-school.

[1] The World Bank-financed emergency COVID response project, Pandemic Response Effectiveness in Pakistan, supports this component.

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• Pillar A supports policy actions to improve quality and efficiency of CRVS systems; improve quality of essential health services, especially at primary health care; and improve equity and decreasing learning poverty in basic education. These policy actions address objectives under (i) Ehsaas Pillars I, II and III and (ii) federal and provincial education and health sector strategies (e.g., National Education Policy 2017-2025; Punjab Education New Deal, 2018-23; National Health Vision 2016-2025). These are foundational policies that in the medium term are expected to contribute to: increased birth and death registration rates, and improved vital statistics on population; increased child immunization and improved health outcomes of the general population; and improved learning outcomes among all Pakistani children, irrespective of gender, geographic location and type of school attended.

• Pillar B supports policy actions to recognize women’s home-based work and support women’s participation in the labor force through appropriate working conditions. These policy actions are anchored in Ehsaas Pillar II and included in provincial governments’ blueprints. In the medium term, these policies are expected to contribute to improved working conditions, income, and social assistance for women.

• Pillar C supports policy actions to improve the efficiency and effectiveness of national safety nets to respond to the impact of the COVID-19 pandemic, while strengthening national safety nets in the short to medium term. These policy actions will support improved coordination of national safety nets, improved targeting, updating the NSER and making it a dynamic database, and expansion of CCTs. These policy actions are included under Ehsaas Pillar II and required to ensure the delivery of Ehsaas response to the impact of COVID-19. In the short term they are expected to mitigate the impact of the pandemic on the poor and protect HC. In the medium term, they are expected to improve the efficiency of BISP (and other safety nets at the provincial level which use the NSER), provide a platform for timely response to economic and other shocks, thus ensuring that those in most need are protected. Further, the expansion of CCTs is expected to generate demand for social services and thus contribute to HC accumulation.

33. Core lessons from the implementation of previous policy lending in Pakistan, especially in social sectors, have been incorporated in the design of the proposed series. SHIFT is the first DPF series in more than a decade focusing on human capital. Between 2004 and 2009, there were six DPF operations with a net commitment of around US$1.0 billion that supported social sectors. This was before the 18th Amendment to the Constitution which devolved greater responsibility to the provinces for social sectors. Growth focused DPFs have also included social policies mostly on poverty reduction through improvements in the administration of safety nets. Key lessons are summarized below.

• Country ownership and alignment to government priorities is critical for program success. The proposed SHIFT series supports reform actions that are aligned to the federal and provincial governments’ priorities to improve human capital outcomes in the country. The implementation of these will require stewardship of the federal government and active involvement of the provinces to ensure that the key results are achieved.

• Sequenced reforms supported by a DPF series of two operations provides greater momentum for policy changes. This is the case for SHIFT: the first operation in the series lays out core reform actions which are

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consolidated by the second operation and supports national reforms which require consensus building between the federal and provincial governments.

• Policy lending needs to be complemented by investments that support achievement of results. Investment lending plays a core role in supporting the sustainability of the reforms. The World Bank has programs for results, investment lending operations and technical assistance in the portfolio and being prepared in parallel to the SHIFT series across the federating units will finance interventions on a sustained basis to achieve implementation results. (See Annex 6 for details.)

4.2. PRIOR ACTIONS, RESULTS AND ANALYTICAL UNDERPINNINGS

34. SHIFT policy reform program is as follows:

Pillar A - Strengthening CRVS, health and education systems essential for HC accumulation

35. Improving quality and sustainability of essential primary health service delivery, and quality and equity in learning, are essential for HC accumulation. Progress in learning and health outcomes has been slow in Pakistan. With devolution of service delivery to the provinces after the 18th Amendment to the Constitution in 2010, there is limited harmonization and standardization of basic health and education services. The pillar also provides the policy framework and implementation mechanism for a harmonized system of civil registration and vital statistics, with a strong focus on birth and death registration. The latter has been proven essential with the need to understand the real number of deaths due to COVID-19.

Improving quality of civil registration and vital statistics

36. This operation supports a national policy to develop a harmonized CRVS system that registers and issues certificates for all births, deaths and marriages, and records causes of deaths. Currently, only one in three Pakistani children under five (36 percent) have a birth certificate with a wide variation by socio economic status: six percent of children under five from the poorest quintile have a birth certificate, compared to 71 percent of children from the richest quintile.20 Less than five percent of deaths are registered in the country and the international standard of recording and classifying causes of death is not practiced. A well-functioning CRVS system can generate timely, complete and accurate information about the levels and trends of fertility (including adolescent fertility) and mortality (including child and adult mortality), population structure and changes at national and sub-national levels. Without such a system, the government is unable to: (i) plan, implement and monitor the development policies and programs optimally; (ii) ensure access to public services such as health care, education, and social protection; and (iii) officially recognize people’s legal identity.

20 National Institute of Population Studies (NIPS) [Pakistan] and ICF. 2019. Pakistan Demographic and Health Survey 2017-18. Islamabad, Pakistan, and Rockville, Maryland, USA: NIPS and ICF.

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37. A national policy framework for CRVS, agreed upon by all stakeholders including federal and provincial governments, is critical. There is no harmonized national policy on civil registration, a fragmented civil registration system across the country, and a lack of defined data-sharing protocols. In the case of birth registration, parents/guardians are required to register their children within a month after delivery by submitting a registration form along with supporting documents at their union council (UC)21, after which a birth registration certificate is issued. This registration is done manually without any verification, as there is limited reporting and exchange of information between local level registries, health department and NADRA.22 The information is then transferred to the provincial government and NADRA using portable storage devices. There are no standard registration forms, requirements or processes used across the UCs. The situation is similar for registration of other vital events. NADRA also runs a parallel registration process through which parents/guardians can obtain a child registration certificate directly from NADRA, requiring separate fees to be paid. DPF1 thus supports the national policy framework has been prepared by the MPDSI and extensively consulted with all provinces.

Prior Action 1. The Ministry of Planning, Development and Special Initiatives has approved the policy to revamp and reform civil registration and vital statistics system.

38. DPF2 will continue to support CRVS policy reform to integrate multiple registration systems,23 designed to allow for interoperability with other systems such as health management information systems and identification system where possible. This will include due consideration for critical issues such as data security, privacy and confidentiality on a nationwide integration mechanism for birth and death registration. The policy to revamp and reform CRVS lays out essential elements that will harmonize, standardize, and integrate the system throughout the country: (i) revision of by laws for alignment and harmonization of processes for civil registration; (ii) standardization of forms; and (iii) roll out of an IT/online interface system between actors involved in delivery of civil registration, particularly UCs responsible for registering vital events and NADRA responsible for managing civil registration system databases. At the core of such setup is a national consensus (districts, provinces, federal government and NADRA) on the establishment of a standardized and fully coordinated nationwide civil registration mechanism. The mechanism would be approved by all provincial Cabinets and its regulation would include the steps to be taken, agents involved and associated mandates, exchange protocols and data privacy, IT interfaces to be used, timeline, and costing.

Indicative Trigger 1A. Provincial Cabinets approve a mechanism for a nationwide harmonization of birth and death registration with the national civil registry at NADRA.

21 The Union Council is smallest administrative unit and the closest representation of the Local Government, Elections and Rural Development Department (LGRDD) to the population.

22 NADRA was created in 2000 to facilitate the registration of all persons and the establishment and maintenance of multipurpose databases, data warehouses, networking, interfacing of databases and related facilities. 23 System and Civil Registration Management System (CRMS).

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39. Expected Results: The policy reform on CRVS supported by this series will help increase the percentage of children with birth registration by age five to 41 percent by 2023. An increased demand for civil registration will contribute to improved vital statistics. The reform will also strengthen the dialogue between provinces and the federal government on national statistics. A pilot is being launched to allow for a thorough understanding of the process and associated costs, and thus inform the subsequent nationwide roll-out. The estimated cost for the roll-out is $188 million24, with most costs incurred in the second and third years (hardware costs) of the reform. The pace of the roll-out will be defined in line with existing fiscal space. Demand for civil registration will be motivated by communication campaigns to be carried out by provincial and local government departments. In some provinces, these will be supported by additional activities, some of which are being supported under WB human capital investment operations. In Punjab, support will be provided to raise awareness about the benefits of registering vital events through social mobilization and conditional cash incentives upon registering births. By adopting data protection and privacy safeguards, the integration mechanism will ensure that personal data of individuals are managed responsibly, including to ensure security of the data, minimize the risks of breaches or misuse, and enabling individuals to exercise their rights as data subjects.

Improving quality of primary health care and increasing the sustainability of national immunization

40. This operation supports an agreed national essential package of primary health care services.25 The country still lags behind in core HC indicators such as maternal and under-five child mortality (rates of 178 per 100,000 and 74 per 1,000, respectively). Non-communicable diseases have been increasing among the population. Primary health care is the first point of access for the population, especially the poor. Achieving UHC will depend on Pakistan’s ability to deliver quality services for maternal and child health including child immunization, specifically given the high fertility rate of Pakistan. A review of basic health services based on the World Health Organization (WHO) report Disease Control Priority – Edition 3 (DCP3), carried out by the MNHSRC, indicates that only 61.6 percent of the 219 recommended basic health care interventions are currently being implemented in the country, of which only 19.1 percent are expected to be available generally. The COVID-19 pandemic is highlighting the weaknesses in the existing package. As a result, MNHSRC has decided to standardize the quality of primary health care services. The first step was the establishment of a national minimum primary health care services package informed by the recommendations under the DCP3 report and the existing packages defined by the provinces. This package also recognizes the key role of community care in the delivery of many basic health care interventions. DPF1 supports the approval of the essential package of primary health services as a framework for standardization of primary health care services in Pakistan.

Prior Action 2A. The Ministry of National Health Services, Regulations and Coordination has approved the essential package of health services at community and primary health care center levels.

24 Currently some provinces have health care packages introduced in primary health care units, however an integrated national package is not yet introduced.

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41. DPF1 supports the institutionalization and sustainability of pooled procurement of vaccines as an integral part of the recurrent budget. Pakistan’s national immunization rates have shown some progress in recent years, but challenges remain as the immunization rate for children aged 12-23 months is still 65.6 percent.26 Primary Health Care (PHC) is the responsibility of the provinces and progress across the country remains uneven due to existing budget norms. These are currently classified as capital expenditure and involve time consuming and lengthy process for budgets to be made available to procure vaccines. This unpredictable flow of funds has been detrimental to child health. The Expanded Program on Immunization (EPI) is implemented by each province through federal and provincial governments through their respective budgets and international support. The ongoing National Immunization Support Project (NISP, 2016-20), financed by the WB and other partners27, has successfully piloted a pooled procurement process for vaccines which allowed for lower costs and quicker and timely delivery of vaccines to all four provinces. The process is regulated by an agreement between federal and provincial governments established under the Executive Committee of the National Economic Council (ECNEC) and has been in place for the past four years. Large procurements associated by the COVID-19 response are being carried out through this mechanism, which has proven to be the most efficient and effective way to deliver commodities nationally.

Prior Action 2B. The Recipient has enabled the use of the national mechanism for pooled procurement of vaccines to continue and be reflected under recurrent budget from FY20/21 onwards.

42. DPF2 will support the inclusion of all costs associated with immunization including vaccines into federal and provincial recurrent budgets within the country’s fiscal framework. This policy measure will ensure predictability by including all costs associated with immunization in the recurrent budget. This would benefit millions of children through improved immunization as an integral part of primary health care and reduce the prevalence of polio and other diseases.

Indicative Trigger 2A. Ministry of Finance and provincial Finance Departments approve the inclusion of all remaining capital costs under the respective expanded program on immunization into the recurrent budget starting from FY21 to institutionalize national immunization.

43. DPF2 supports the establishment of provincial and federal costed plans to sustainably and progressively integrate into recurrent expenditure core costs associated with the delivery of the essential package of primary health services. This entails an increase in the volume and efficiency of the budgetary envelope for the health sector. Taking into account the fiscal framework for Pakistan, this entails: (i) increasing budgetary allocations to health; (ii) reallocations within the health sector, as expenditure tends to be diverted to tertiary health care; and (iii) transitioning of core primary health care expenditure from capital to recurrent expenditure.

26 Same as footnote 17.

27 GAVI, The Bill and Melinda Gates Foundation

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Indicative Trigger 2B. Ministry of Finance and the provincial Finance Departments, in consultation with relevant line departments, approve costed plans for integration in the recurrent budget of essential primary health care vertical health programs.

44. Expected Results: It is expected that the policy reform will support the increase in immunization rate for children less than 24 months of age to 81 percent in 2023. This is an approximate increase in the immunization of young children of 17 percentage points over the current baseline. The reform will improve national harmonization and standardization of minimum PHC service delivery; increase sustainability of core interventions within PHC such as routine child immunization; and improve coordination around PHC between federal and provinces including usage of efficient methods for pool procurement of vaccines, which can be extended to other health commodities. The reform will entail a shift from capital to recurrent expenditure of $US68 million. The COVID-19 pandemic has shown the need for strong PHC service delivery and the need for reform. To support the provincial and federal governments to respond to the pandemic and to ensure the operationalization of the proposed reform, the WB is supporting Pakistan through the approved Pandemic Response Effectiveness in Pakistan Project, and through Human Capital Investment Projects in all four provinces, which include components on PHC aligned with the policy reform. NISP will continue to support immunization efforts. The Asian Development Bank will provide support for PHC efforts, especially those related to COVID-19.

Reducing learning poverty among all children

45. The government is committed to ensuring equity in access and quality of education, which is essential to reduce Pakistan’s high learning poverty at 75 percent. Pakistani children on average spend 9.3 years in school until age 18; however, they only learn an equivalent of 5.1 years of education. Quality of education varies among geographical regions, as well as by type of institution and by gender, for example learning poverty varies from 95 percent in the Lasbella district of Balochistan to 12 percent in Sialkot in Punjab28 and lacking an equity focus this heterogeneity will amplify and even more so due to the COVID-19 pandemic. Education has been devolved fully to the provinces. Under Article 25-A of the Constitution, the state is responsible for provision of free and compulsory education to all children of the age 5 to 16 years, giving the federal government the responsibility to work with the provinces to guarantee equity in access and quality of education in the country. In line with this, MFEPT launched the National Education Policy Framework (NEPF) to serve as guiding document for the provincial strategy documents. The federal Cabinet approved the National Education Plan (NEP) 2020, prepared by the MFEPT, and endorsed by all provincial education authorities at the Inter-Provincial Education Ministers Conference (IPEMC).

46. The NEP lays out a clear set of national access and learning goals, standards, measurement initiatives and programs across the various school systems and provinces. In addition, it establishes the way forward for skills development and higher education. This develops national consensus through a consultative process to deliver key

28 Quality differences by school type are also marked. Recent research in the province of Punjab suggests that students from the private sector schools – even the low-fee private schools, out-perform their peers in public schools, even though public-school teachers are better qualified compared to private sector teachers. See, Is there a learning crisis in Punjab? SABER August 2019 (Initial data release).

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aspects of uniformity and quality in education, with a special focus on lagging districts across the country. The government is advancing on substantial policy-level reforms: consultative sessions with religious boards are being held and regional offices are being set up under the newly formed Directorate General of Religious Education to mainstream religious education; to advance on standardization the MFEPT is building consensus on the revised, uniform national curriculum for grades 1 to 5. In addition, provinces, through IPEMC, have agreed on the National Equitable Education Program (under preparation with support from the Bank) as well as the provision of scholarships in higher education and the expansion of digital technology. To support the Plan, MFEPT is setting up an Education Policy Research Unit to coordinate the implementation between departments at national and provincial level, and providing evidence and support to provinces on pedagogical best practices, data collection standardization, and student learning measurement. The NEP is supported under DPF1.

Prior Action 3: The Cabinet has approved the National Education Plan 2020. 47. DPF2 supports implementation of the national equitable education program under the NEP 2020, which requires targeted support to reduce learning poverty and the agreement on a minimum standard of learning. There is global recognition that measuring student learning outcomes is critical to identify and improve quality of education. In Pakistan, there is no comprehensive assessment system that can allow for a national understanding of quality of learning outcomes across various schooling systems and across provinces/areas. At present there are multiple data platforms at both federal and provincial level without consolidated effort towards harmonization and utilization of information, lack of uniform methodologies and incomplete information. As part of the reform process, and under the approved Plan, a new National Assessment Policy Framework will be prepared to guide the development of quality student assessments in the country. This will also ensure a more accurate ranking in international comparisons such as the HDI and learning poverty. This will be supported under DPF2.

Indicative Trigger 3A. Ministry of Federal Education and Professional Training approves the national student assessment framework.

48. Expected results: one national assessment exercise under the new national education standards is expected to be carried out by 2023, thus contributing to informed policy decisions, improved resource allocation and targeted interventions to decrease learning poverty in the short to medium-term with an equitable lens. Pakistan will have comparable data on learning outcomes at the national level and from all three education sub-system (public, private and religious) for the first time. Transparency on learning standards would generate higher accountability for the public sector. This will be specifically relevant post COVID-19 when schools open to address the risk of greater inequities in access to education, especially with upper quintiles having access to advance on-line tools. In addition, a national assessment on distance learning will identify whether such interventions can serve as parallel modes for education. Completion of the national assessment exercise has been chosen as the indicator to measure progress of the reform due to the criticality of assessment for quality driven interventions.

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Pillar B – Recognizing the contribution of women to economic productivity

49. Pillar B focuses on supporting legislative reforms to increase women’s economic engagement and promote their social wellbeing. Pakistan ranks 151 out of 153 countries in economic opportunity and participation in the Global Gender Gap Report 2020.29 Low female labor force participation also highlights the disparity in economic opportunity and unfavorable conditions faced by women. Research shows that limited mobility, overwhelming housework and childcare responsibilities, limited education and skills, discriminatory attitudes, workplace barriers and lack of female-friendly workplaces are some of the key constraints.30 Women are consequently represented in the informal workforce particularly home-based work. The reforms supported by the DPF series will help address legislative gaps on the rights of home-based workers; and promote uniform working conditions for women through amendments in labor laws, to allow access to segregated toilets, childcare facilities, safe transport and equal working hours.

Recognition of home-based workers and improved working conditions for women

50. DPF1 will support official recognition of Pakistan’s approximately 12 million female home-based workers.31 Most women engage in informal sector activities including home-based work (approximately 70 percent of the women in the workforce32) which is not legally recognized nationwide. These workers face a multitude of challenges including limited or no access to organized markets, credit institutions, formal education and training institutions, and most other public services and amenities. At the bottom end of the informality continuum, home-based workers are chronically and significantly underpaid. In Karachi’s textile and garment industry, the average hourly wage rate across all work types was PKR 41 per hour (US$0.39), just 60 per cent of the statutory minimum wage in 2017 (PKR 67.50 per hour in any working day).33 As a workforce, women home-based workers have remained unprotected, largely invisible and under-paid.

51. The province of Punjab, with 8.9 million home-based workers,34 has developed the Home-Based Workers Act. The Act will be operationalized through the development of Rules of Business for the implementation mechanism of the law. A Home-Based Workers Council will be formed to register home-based workers and map home-based workers in different economic sectors and geographical areas. It will have representation from home-based workers and civil society organizations to develop a robust information dissemination plan. The government of Punjab will concurrently organize an awareness raising campaign to highlight benefits of registration (access to appropriate wages, social security benefits) for home-based workers. A similar process has been followed for domestic workers in Punjab, a category of informal workers, and is in the process of successfully registering these workers. Registered home-based

29 The Global Gender Gap Report 2020, World Economic Forum

30 Ibid

31 Home net and ADB

32 Pakistan Employment Trends 2018, Pakistan Bureau of Statistics

33 Pakistan’s Hidden Workers: Wages and Conditions of Home-Based Workers and the Informal Economy, ILO, 2017

33 The Punjab Homebased Workers Survey, 2017, Bureau of Statistics, Planning & Development Department, Government of Punjab

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workers will be entitled to enter into written contracts with their employers to ensure their access to appropriate wages and other benefits including employees old age benefits.

Prior Action 4. The Punjab Cabinet has approved the Punjab Home-Based Workers Act.

52. DPF2 supports the continuation of the home-based workers policy reform at the federal and provincial level along with amendments to existing labor legislation to improve working conditions for women. The government of Sindh passed legislation on home-based workers in 2018 and is now gearing up for implementation. DPF1 has supported the approval of similar legislation for Punjab. DPF2 will support the approval of similar legislation for federal territories and for Khyber Pakhtunkhwa and Balochistan. Further, existing provincial Acts on Shops and Establishments, and Factories would be amended to ensure improved working conditions for women. Proposed amendments include removing restrictions on women’s working hours, regulations for provision of segregated toilets, childcare facilities on premises and safe transport.

Indicative Trigger 4A. Home-based Workers Bills move in federal Cabinet and Provincial Cabinets of Khyber Pakhtunkhwa and Balochistan. Indicative Trigger 4B. Draft amendments on Shops and Establishments Act and Factories Act to provide better and safe working conditions for women including no restriction on working hours, toilets and childcare facility move in Provincial Cabinets.

53. Expected results: The policy reform on home-based workers will support home-based workers across Pakistan (a majority of whom are women) to transition into the documented economy. It expected that 70 percent of those registered by 2023 will be women. Further, an increase of four percentage points in women working in shops, establishment and factories is also expected by 2023 due to the amended Acts on shops, establishments and factories. Successful implementation of the reform, especially for the home-based workers, will depend on the ability of the Labor Department to register home-based workers. The Shops and Establishment Act, Factories Act amendment will result in improved working conditions for women employed in factories and retail sector. Once the law for home-based workers is enacted and implemented, it is expected that home-based workers will have improved access to social security and better wages among other potential benefits. Technical assistance will be provided by the Bank to support implementation plans for the various provincial bills in collaboration with UNWomen and International Labor Organization (ILO), who are already working with the federal and provincial governments. It will also reduce the vulnerability of these workers in emergency situations, as has been highlighted by the current COVID-19 crisis.

Pillar C – Improving national safety nets to respond to shocks in a more efficient manner

54. The institutions set up in the last decade are providing social safety nets to protect the poor and vulnerable, including during shocks. Key advances include: (i) the BISP Act in 2010 that set up both BISP as an institution and the national flagship income support program targeting the bottom 20 percent of the population; (ii) the first round of the NSER linked to the national identification system in 2010-2011; (iii) a payment system that as of 2019 is delivering 99 percent of cash transfers electronically and an ongoing update for biometrically verified payments; and (iv) the

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introduction in 2012 of Waseela-e-Taleem (WeT), a CCT program to improve primary school enrollment. Provinces have also introduced their own safety nets programs, and Punjab has established a Punjab Social Protection Authority. BISP and its delivery systems have demonstrated robustness, and need to continue to evolve and support pro-poor initiatives of the government. In addition, coordination between BISP and provincial safety nets initiatives has been challenging at times, as provinces yet have no role in NSER governance. To this end, it is essential to improve targeting, reduce inclusion and exclusion errors of safety nets, and improve the coordination nationwide. Annex 7 provides details of various safety net programs in the country, including those supported by the DPF for the COVID-19 response. Implementation of the reform will cost US$2.1 billion, 35 out of which US$675 million covers the one-off emergency cash transfers. Some of these costs will be supported by the DPF series, the recently approved Pandemic Response Effectiveness in Pakistan, other development partners (ADB, DfID and IMF RTI). 55. This pillar focuses on: (i) improving the coordination between national safety nets to respond to the impact of COVID-19 and to protect and support HC accumulation; (ii) accelerating NSER’s evolution from what was primarily a beneficiary registry for BISP to an independent and dynamic social registry that improves the efficiency of a range of social programs and with a more inclusive governance system; and (iii) improving the efficiency and adequacy of the existing safety nets through their recertification – entry of new eligible households and exit of ineligible households based on the ongoing update of the NSER – and maintaining the value of transfers over time.

Improved coordination of national safety nets to respond to the impact of COVID-19 and protect and support HC accumulation

56. The country’s ability to mitigate COVID-19 disruption depends on how quickly and efficiently its safety nets can reach those most in need. The Ehsaas package will require a concerted effort between BISP and the provinces to ensure that those in need are appropriately identified and are provided with assistance. Given the lack of an updated NSER, BISP has recently established an ad hoc emergency targeting system. The targeting system takes advantage of the national computerized national identity card (CNIC) registry and family structure maintained by NADRA, and the linked SIM information system maintained by Pakistan Telecommunication Authority (PTA). The registry of CNICs and phone numbers is further combined with big data to exclude categories that are likely to be less in need for assistance.36 The emergency targeting system is further complemented by an opt-in/self-targeting system supported by a nationwide communication campaign which allows people in need to request for assistance by submitting their CNIC via SMS. BISP can deliver assistance to 12 million beneficiaries.

57. DPF1 supports an improved targeting mechanism through the establishment of a framework for improved coordination between BISP, NADRA, PTA and provincial governments. Data sharing will allow faster deployment of assistance and minimize double dipping.

35 This is an estimate based on recent calculations by BISP and actual costs may vary depending on the length of the COVID-19 crisis.

36 Big data screening excludes from the list of potential beneficiaries (i) government employees; (ii) car owners; (iii) individuals who have traveled abroad (air travel); (iv) monthly mobile phone bill; (v) 2010 NSER.

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Prior Action 5A. The Cabinet has approved the cash assistance package under the Ehsaas Program in response to COVID-19 pandemic, which includes a framework for improved coordination between BISP, NADRA, PTA, and provincial governments.

58. The expansion of WeT across the country can sustain and improve overall enrollment rates, including for girls. COVID-19 has already resulted in school closures, disrupting children’s learning. This is likely to be further compounded with the onset of an economic crisis which could result in more out of school children and rising malnutrition. WeT conditional cash transfers linked to primary education have been tested successfully in Pakistan, yet covers only a third of Pakistan’s 160 districts (around 2.8 million children). Its high impact makes it highly scalable.37 A similar approach can be taken for health and nutrition services to overcome high stunting levels which could be exacerbated by the COVID-19 crisis. 38 On-going technical support under NSSP and NISP will further scale/roll-out these programs. DPF1 supports the national expansion of WeT and the launching of nutrition sensitive cash transfers in federal areas.

Prior Action 5B. The BISP Board has approved the plans for: (i) national expansion of the WeT Program; and (ii) implementation of nutrition sensitive conditional cash transfer program at the federal level, as stipulated in the Ehsaas Program.

59. DPF 2 will improve coordination between BISP and provincial safety nets for HC accumulation post-COVID-19 for early recovery. DPF1 supports improved coordination to respond to the COVID-19 pandemic. Such coordination must be sustained, especially with regards to safety nets and nutrition sensitive conditional cash transfers. There is a need for an agreed upon mechanism between the provinces and the federal government for sharing of responsibilities to avoid duplication. This requires the federal government to have a Memorandum of Agreement, approved by provincial cabinets, which defines modalities and respective fiscal and operational responsibilities.

Indicative Trigger 5A. Provincial Cabinets approve a coordination and collaboration mechanism for nutrition sensitive cash transfer described in a Memorandum of Agreement between the provincial governments and BISP under the Ehsaas Program.

60. Expected results: The policy reform is expected to benefit 16.5 million beneficiaries through unconditional and conditional cash transfers from federal and provincial programs. The establishment of a framework for data-sharing among BISP, NADRA and PTA will allow for an efficient national safety nets response to the COVID-19 crisis. The safety net system is strengthening systems that address education attainment, early childhood development, and maternal health. It will help increase provincial accountability for implementation of safety net programs, including CCTs. The improved coordination between federating units will allow more households to benefit and thereby support HC accumulation.

37 School participation rates for boys and girls age 6-10 are receptively 79.6 percent and 69.2 percent. Weathering the storm: restoring macroeconomics stability, Pakistan Development Update, June 2019.

38 The percentage of children below age five that are moderately to severely stunted in Pakistan is 37.6 percent. Weathering the storm: restoring macroeconomics stability, Pakistan Development Update, June 2019

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Update and governance of NSER

61. With 85 percent coverage, the NSER has the potential to be used for a range of programs. It was established after BISP carried out a nationwide door-to-door survey during 2010-2011 using a Poverty Scorecard to collect socio-economic data of over 25 million households. The ongoing updating of NSER will be completed by the end of 2020. This will ensure well-targeted safety nets to operate post-COVID-19. Two aspects: socio economic classification; and data exchange protocols, are being strengthened. The socio-economic classification will enable the NSER to respond to shocks by pre-identifying poor and near-poor households that could receive additional benefits and permit different cut-offs. The effectiveness of the NSER as a social registry requires clear data exchange protocols among relevant user institutions. The data sharing protocols will classify data into (i) Public, (ii) Private, and (iii) Confidential domains in order to ensure privacy and protection of information. BISP has classified all currently available data sets. These data exchange protocols can also be cascaded to ensure an accurate and dynamic social registry with better targeting. The socio-economic classification system has been approved by the Board; as has been the case for the revised data exchange protocols. These are supported under DPF1. Prior Action 6. The BISP Board has approved revised data exchange protocols and socio-economic classification to be applied to the updated NSER data for ease of targeting by social programs, as stipulated in the Ehsaas Program.

62. DPF2 will make the NSER a dynamic national social registry with the associated governance arrangements. For NSER to be a national social registry it needs to: (i) have greater independence from BISP’s program-related functions to ensure adequate resource prioritization; (ii) be better integrated with a range of programs outside BISP at both the federal and provincial level to allow them to access and utilize the data effectively for targeting; (iii) improve and integrate feedback from programs; and (iv) have more representation of the provinces in decision making as its main potential users. However, these aspects are still quite limited and tend to function in an ad hoc way. This calls for separating the NSER from the current safety net programs of BISP and giving it an independent governance structure within BISP with appropriate representation of the main stakeholders (including provinces) for technical and policy level decision making.

Indicative Trigger 6A. BISP Board approves the statutory regulations for the governance of NSER to allow its independence from all programs (federal and provincial), including a governing committee with federal, provincial and other core stakeholders’ representation.

63. Expected results: By 2023, 20 million households classified by welfare status and percentile will be included in the NSER. This will allow both the federal and provincial governments to deliver safety nets to those in most need. An updated and independent social registry with strong governance will make the NSER more capable of delivering its core functions at different levels, including: (i) policy functions, such as decisions around intended coverage of the NSER, frequency of updates, range of programs whose targeting should rely on NSER, use for national monitoring (e.g., of Ehsaas); and (ii) technical and operational functions, such as data collection and management, assessment of needs and conditions (e.g., classifying socio-economic status), quality assurance, data exchange for validation and with end users. Securing strong buy-in for the NSER from the provinces, which have primary responsibility for implementation of HC

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programs, can have greater efficiency gains (e.g., better targeting, reduced duplication and fragmentation) and ultimately better HC outcomes. Improved data exchange protocols will assist national programs to utilize a central and unified registry. Implementation of the reform will be measured through the increase in the number of households classified by welfare status and percentile in the updated NSER, that is, the scope of the updated database.

Improving efficiency of BISP programs

64. BISP’s long-delayed recertification of beneficiaries can improve its effectiveness. As of 2019, BISP’s unconditional cash transfer (Kafalat) program covered 5.4 million families and its conditional cash transfer (WeT) had provided benefits to 2.8 million children. However, eligibility for these programs was determined based on a proxy means test using data from the 2010-2011 NSER. Some beneficiaries improved their welfare status substantially due to safety net support. Enrollment for the income support program remained closed for nearly a decade. Thus, many households that are no longer eligible continue to receive assistance, while those deserving have been excluded. Recertifying beneficiaries and allowing space for new entrants is clearly needed, especially since these programs tend to have an important influence on households’ ability to accumulate HC. DPF1 supports BISP beneficiaries’ recertification process.

Prior Action 7. The BISP Board has approved the Recertification Strategy, with clear protocols for entry and exit into the kafalat and conditional cash transfer programs.

65. DPF2 supports vertical expansions of BISP under the updated NSER. Supporting and protecting poor and vulnerable families from current and future crises (such as COVID-19) requires a safety net system capable of delivering adequate and quickly scalable benefits that will not act as work disincentives. BISP quarterly disburses PKR 6,000 (US$ 38), in monthly payments of PKR 2,000 (US$ 12) (as of February 2020) per family under the Kafalat Program, closer to the international benchmarks. Impact evaluations for the program have also flagged low value of transfers as the reason that BISP’s impacts in some areas such as nutrition are muted or not observed. As of early 2019, the BISP beneficiary total household consumption was 4.7 percentage points lower than those in the poorest quintile (12 percent), both considerably lower than the international benchmark.39 The current transfer amount is 15 percent of pre-transfer household consumption among the poorest quintile. For a household with two children enrolled in WeT, including one girl child, the benefit amount reaches 20 percent of pre-transfer household consumption, more in line with international best practices. The current value improves adequacy but there is need for measures for a (vertical) increase as well as a mechanism to maintain the real value over time. This should be based on periodic updates (e.g., benchmarking using household survey data). It should also balance concerns about loss of the transfer’s real value with the fiscal space needed to sustain the increase over the program’s duration.

Indicative Trigger 7A: Cabinet approves a framework allowing vertical expansion of BISP’s Kafalat Program with

39 World Bank State of Safety Nets report, 2018

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updated NSER, and a mechanism for the periodic update of regular cash transfer benefits.

66. Expected results: The policy reform on improved efficiency of BISP programs is expected to increase in 37 percentage points the beneficiaries from the bottom two quintiles benefiting from BISP programs, from a baseline of 33 percent to 70 percent. This will allow for better targeted delivery of safety nets to the poor and vulnerable. The mechanism for periodic updates of the regular cash transfer will allow to continuously adjustments the benefit in line with existing fiscal space and with the needs of poor and vulnerable. It is important to ensure that the most deserving households are supported with an adequate level of compensation. To this effect periodically reassessing the welfare status of the households becomes important to maintain accuracy in targeting of pro-poor programs. The recertification strategy based on the new NSER is expected to have significantly better targeting performance than the current NSER, to include the most in need and vulnerable and exit ineligible beneficiaries. Devising a mechanism for periodically updating the generosity of the transfers will help close the income-related gaps in HC investments by affording households greater protection against current and future shocks, whether economic weather-disaster related, or pandemics such as COVID-19. The success of the operationalization of this policy reform will depend on the ability to implement the recertification strategy and increase the number of beneficiaries from the bottom two quintiles. As such, the indicator used to measure progress of the reform is the percentage of BISP beneficiary families covered from the bottom two quintiles.

Table 5. DPF Prior Actions and Analytical Underpinnings

Prior Actions

Analytical Underpinnings

Key Findings Informing the Prior Actions

Background for all pillars

- Pakistan@100

- Pakistan Human Capital Policy Note

- Weathering the storm: restoring macroeconomics stability, Pakistan Development Update, June 2019

- Medium to long-term vision for Pakistan including recommendations on key policies for improved sustainable growth and increased HC accumulation.

Pillar A – Strengthening CRVS, health and education systems essential for HC accumulation

PA1. Improving quality of civil registration and vital statistics

- Roadmap for Digital Birth Registration: Insights on Scale and Sustainability from Pakistan, UNICEF

- Civil Registration and Vital Statistics 2013: Challenges, Best practice and Design Principles for Modern Systems, WHO

- Rapid Assessment of CRVS Systems in Pakistan, 2013, UNICEF

- Current status of CRVS system

- Absence of national policy on CRVS

- Identification of actors involved and absence of harmonization of CRVS interventions

- Gaps in CRVS legislation

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- Comprehensive Assessment of CRVS System in Pakistan, 2014, UNICEF

- Situation Analysis of Children in Pakistan, 2017, UNICEF

- Review of Current Legislation for CRVS Towards a Uniform CRVS Law in Pakistan, MPDSI & UNICEF

- Study on Availability, Registration and Quality of Hospital Based Records of Vital Statistics (Births & Death) in Punjab. MPDSI & UNICEF

- Gap analysis of current CRVS practices, mapping stakeholders, and potential data sources both at Federal and Provincial Levels, Ministry of Planning, Development and Reform, Islamabad. December 2018

PA2A and PA2B. Improving quality of primary health care and increasing the sustainability of national immunization

- Review of Essential Health Services in Pakistan based on Disease Control Priorties-3, April 2019, MNHSRC & WHO

- Working Paper: Status of Essential Health Services in Pakistan based on DCP3, MNHSRC, 2019

- Mapping of DCP3 Interventions, MNHSRC, 2019

- DCP3 Roadmap 2020, WHO, 2019

- The Decisive Balance for Achieving Universal Health Coverage Integration of Sexual & Reproductive Health and Rights in National/ Provincial Policies, Programs and Practices in Pakistan

- Matrix of Essential Package of Health Services type of healthcare facility and at community level in Islamabad Capital Territory, MNHSRC

- Pakistan National Immunization Accounts and Budget simulations FY18/19

- Pakistan Expanded Program on Immunization: an Economic Analysis (WBG 2016)

- EPI Intergovernmental Implementation Framework for Pooled Vaccine Procurement and Payments (WBG, 2017)

- Pakistan National Immunization Support Project Mid-Term Review

- Absence of harmonization and standardization of minimum primary health care service delivery packages

- Successful and efficient system piloted for pool procurement of vaccines, which ensured availability of vaccines nationwide for more than 3 years

- Financing of basic core primary health interventions such as immunization and maternal and child health through development expenditure jeopardizing the sustainability of health care delivery

PA3. Reducing learning poverty among all children

- Is there a learning crisis in Punjab? SABER Initial Data Release, August 2019 - Pakistan District Education Management Service Delivery Study (WB)

- Absence of national policy on education to regulate all sub-systems: private, public, and religious

- High learning poverty in Pakistan at 75

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- World Development Report 2018 (WDR 2018)—Learning to Realize Education’s Promise

- National Education Policy Framework, MFEPT

- Punjab Education Sector Plan 2019 to 2023

- School Education Sector Plan and Roadmap for Sindh (2019 – 2023)

percent

- Disparities in learning outcomes on gender, income, provincial and between public, private, and religious schools

- Absence of national assessment system preventing collection of accurate information on quality of learning for reform

Pillar B: Recognizing the contribution of women to economic productivity

PA4. Recognition of home-based workers and improved working conditions for women

- Barriers to Pay Equality in Pakistan: The Gender Pay Gap in the Garment Sector

- The State of The World’s Children 2017: Children in a Digital World, UNICEF

- Recognizing and Supporting Home Based Workers: South Asian Regional Consultation on National Policy for HBWs in Pakistan

- The Punjab Home Based Workers Survey, 2017, PBS

- Pakistan Employment Trends 2018, Pakistan Bureau of Statistics

- Pakistan’s Hidden Workers: wages and conditions of home-based workers and the informal economy, ILO, 2017

- Searching for the Invisible Workers, A Statistical Study of Home-Based Workers in Pakistan, ILO 2011

- Homebased Workers in Pakistan, Statistics and Trends, WIEGO 2013

- Absence of legislation to recognize the large number of home-based workers, most of them being women, and to provide them with rights and social assistance support

- Absence of supporting conditions for women in labor laws ruling activities in which women can engage, such as trade

Pillar C: Improving national safety nets to respond to shocks in a more efficient manner

PA5A and PA5B. Improved coordination of national safety nets to respond to the impact of COVID-19 and protect and support HC accumulation

- BISP – Evaluation of the Waseela-e-Taleem Conditional Cash Transfer, 2016, OPM

- Waseela-e-Taleem: Options for Restructuring the Benefits, 2019, World Bank

- Current appropriateness of the NSER and sources of errors

- Existing sources of data to be used in the emergency

- Absence of coordination in national delivery of safety nets

- Positive impact of education cash transfers on increasing demand for education services

PA6. Update and governance of NSER

- NSER Legal Frameworks (Ongoing, World Bank)

- NSER – Interoperability frameworks and data-exchange protocols (Ongoing, World Bank)

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- Transitioning NSER into a dynamic social registry (Ongoing, World Bank)

PA7. Improving efficiency of BISP programs

- BISP Recertification Strategy, 2019, World Bank (ongoing)

- Expansion of Safety Nets in Pakistan in Response to Fiscal Measures, 2019, World Bank

- Organizing Social Protection in Federal States (WB)

- Pakistan National Social Protection Program-for-Results: Technical Assessment (WB)

- Changing the Poverty Score in an Ongoing Cash Transfer Program: Evidence from Pakistan’s BISP Cash Transfer Program (Ongoing, IFPRI and World Bank

- Impact evaluation and assessment of BISP’s new payment system (Ongoing, World Bank and Duke University)

4.3. LINK TO CPF, OTHER BANK OPERATIONS AND THE WBG STRATEGY

67. The proposed DPF series supports the WBG Pakistan CPS FY15-20, particularly Results Areas 4 and 3 – Service Delivery and Inclusion, respectively. Policy reforms in the series support CPS objectives of improved resources management; improved access to maternal and child health service; increased school enrollment and adoption of education quality assessment. Enhancing inclusion of women across sectors; increasing economic opportunities and productively engaging women are also objectives of CPS’s Results Area 3; so is the case for the safety nets reform. SHIFT is also aligned and informed by the forward-looking strategy report Pakistan@100 – Shaping the Future. A companion policy note to the report on HC lays the analytical background for the reform agenda.

68. Several WB-financed operations both in the portfolio and pipeline support the achievement of results related to the proposed policy reforms in the series. Policy actions on safety nets and immunization are supported by the on-going national federal projects: National Social Protection Project (NSSP) and NISP, which also include technical assistance components that can help move forward the reforms. Pipeline operations were also developed in full alignment with SHIFT’s reform program. Two national programs are under consideration to support education and health. At the provincial level, four HC operations are under implementation and preparation: the Balochistan, Khyber Pakhtunkhwa, Sindh, and Punjab HC Investment Projects, and the Sindh Early Learning Assessment through Classroom Transformation, and Sindh Improving Skills for Out-of-School Youth (See Annex 6 for details.). Additional technical

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assistance will also be provided by the Bank and other partners such as UNICEF, UN Women, the Japan International Cooperation Agency (JICA), and the United Kingdom Department of International Development (DfID).

4.4. CONSULTATIONS AND COLLABORATION WITH DEVELOPMENT PARTNERS

Government Consultations

69. The governments’ strategies inform the reform agenda supported by the series and were extensively consulted upon between the federal and provincial governments. The federal Ministry of Finance led the dialogue with its provincial counterparts. Under Pillar A, with regards to CRVS policy reform, MPDSI - Technical Support Unit has been carrying out regular consultations under the National Steering Committee with the provincial leads as well as thematic consultations for specific reform areas. The MFEPT has been leading consultations with counterparts at the level of the Inter-Provincial Ministers of Education Conference, and with representatives of private sector and religious authorities. The MNHSRC has been organizing a series of consultations on UHC with provincial counterparts including respective finance departments and other key stakeholders to compare the current scope of Essential Health Services in Pakistan against the DCP3 recommended interventions. Consultations around reforms under Pillar B have been taking place under the leadership of federal and provincial Departments of Labor and Parliamentarians and included discussions with religious leaders, Workers Federations and groups, HomeNet Pakistan, Ministry of Law and Ministry of Human Rights as well as other development partners. Rigorous consultations (including tripartite consultations) on home-based workers policy issues have taken place in all provinces over the last few years and as a result this law has already been passed in Sindh and other provinces are in the process of drafting legislations. Finally, multisectoral and multi-stakeholder consultations under Pillar C have taken place under Ehsaas program related consultations, after it was officially launched by the Prime Minister.

Collaboration with Development Partners

70. The series is being prepared in close collaboration with development partners. UNICEF has been a close collaborator with regards to the CRVS policy reform and is expected to support the implementation of the reform as the series moves forward. DfID and other agencies such as WHO, United States Agency for International Development, United Nations Population Fund, and Global Financing Facility are engaged in supporting policies under UHC and equity and quality of education. Other development partners collaborating include the JICA, UNWomen and ILO. These partners are also expected to support implementation of the reform agenda through provincial engagements. Further, Asian Development Bank and the Asian Infrastructure Investment Bank have expressed interest to parallel finance the policy reform as laid out by the prior actions in the SHIFT matrix.

5. OTHER DESIGN AND APPRAISAL ISSUES

5.1. POVERTY AND SOCIAL IMPACT

71. SHIFT supports reforms that are inherently pro-poor and aimed at enhancing HC and productive engagement of the poor. The DPF supports policies that will also help mitigate the impact of COVID-19 pandemic on the poor and vulnerable. It also supports policies that enhance the delivery and accessibility of services, in particular to the more disadvantaged, through strengthening vital statistics and social registry database for better targeting. It supports

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policies to improve utilization of essential social services, especially for the underserved, such as immunization, minimum health and education standards and increased social protection support. The DPF promotes recognition of women’s engagement in the economy. These reforms are expected to foster poverty reduction, social inclusion, and gender equality in the mid- to long-term. A Poverty and Social Impact Analysis (PSIA) was conducted for the actions and triggers under each pillar. Overall, there were no potential negative impacts determined for the policies supported by the DPF. The reforms in each of the pillars are supported by findings of considerable analytical work by the Bank and others. However, the potential for unintended effects of reforms in the short-term may require continued attention during implementation. Just-in-time assessments and continuous policy dialogue to accompany the DPF series will help monitor potential unintended social effects in the short-term, if they emerge, and provide continuous technical advice to GOP.


72. Actions under Pillar A are expected to have overall positive net benefits for the poor. These will result from better CRVS systems, uniform minimum standards for education and health and sustainable supply of immunization. Prior Action 1 strengthens the CRVS system which provides authentic information on population and birth and death statistics and is a source of useful analysis in the public services, public administration, and decentralized sectors and for measuring effectiveness of public service delivery and good governance. Additionally, at the individual and household level, it helps getting the right identification documents to access legal rights and protect from exploitation, such as child labor, inheritance and transfers as well as other financial services.

73. Effective CRVS will benefit the poor as it will consolidate and reduce the actual cost and transaction costs for registering life events. Cost benefit analysis from international experience suggests that though cost of setting up and running an effective CRVS can be high, it is cost effective in the medium to longer term because it reduces multiple agency costs and duplication of processes and thus increases uptake. The policy to ensure basic health care package and pooled procurement of vaccines as critical part of the reform also has positive impact on low cost service delivery for the poorest.

74. The education policy framework, on which the National Education Plan 2020 is based, is developed on the premise of quality uniform standards of teaching and learning for all. This reform is crucial towards improving education quality (particularly literacy and numeracy) and equity. For the reform to have its intended impacts, it will be important to reduce school dropouts for both boys and girls (and particularly girls in secondary school) and promote equitable access to uniform quality of education. The Prior Action on education is a core first step towards more comprehensive reforms. Implementation of the plan across the diverse set of provinces and groups may present important equity challenges in the devolved education system post 18th Amendment. Curriculum variations across provinces, as well as school types, may reflect social, cultural, linguistic, and ethnic differences of the population. Literature has emphasized that inclusive education is, to a great extent, about building responsive institutions that have a good understanding of the needs and obstacles of their students, particularly those that are furthest behind. Doing so in a culturally and socio-economically diverse country requires mechanisms and spaces to constantly review and improve education policy and teaching practices based on the knowledge acquired in the classroom and school context. The proposed trigger of having a national assessment framework taking into account the standards of learning and the diversity of the nation will prove advantageous for the poor and vulnerable students.

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Pillar B – Recognizing the contribution of women to economic productivity

75. Pillar B is related to the recognition and regulation of informal sector work which accounts for the bulk of economic activity in Pakistan – especially among women. The Home-Based Workers Act protects the rights of persons who work in the informal or unorganized sector carrying out remunerative work within their homes. The triggers support amendments to existing labor legislation (specifically the Shops and Establishments Act and Factories Act) to improve working conditions for women including restriction on working hours, toilets and childcare facility in each of the respective provinces. This sector could readily generate more employment for women given that they face mobility constraints and rigid gender norms in public spaces. While this policy reform is essentially pro-poor and promotes gender equality in working conditions and access to jobs, it could potentially have the unintended effect of further discouraging employers from hiring female workers in the short-term. There is limited data on the nature of home-based work in Pakistan, along with a lack of definitions and classifications, which results in home-based workers falling through the cracks of standard labor statistics. International labor standards covering home-based work have not been formally adopted and implemented in Pakistan.40

76. Along with legislation, it is important to support implementation of existing laws in the formal sector. Enforcing certain labor standards in the informal sector is challenging, particularly in the case of home-based workers. It is important to involve home-based workers’ associations in the crafting of legislation, and in developing strategies for implementation. Shifts in macroeconomic trends can significantly affect home-based workers who absorb a substantial portion of the risks of production. International evidence shows that unfair value chain dynamics, such as irregular and unpredictable timing of work orders, delayed payments, or irregularities in the supply of raw materials can put these workers at risk. Women from poor or marginalized communities are particularly vulnerable to exploitative practices. The Bank will assess and monitor this using labor survey data and additional quick assessments, as well as the impact of the policy implementation on the registered home-based workers.

Pillar C – Improving national safety nets to respond to shocks in a more efficient manner

77. The policy reform under pillar C is expected to have immediate and short-term positive impacts on poverty and vulnerability, including the impact of the COVID-19 pandemic. The BISP experience suggests that it has been an important income support mechanism for the poor. The main self-reported use of the BISP cash transfer by beneficiaries themselves is food (71 percent) while other uses include expenditure on health (10 percent), clothing (8 percent), and education (7 percent). Evaluation of the program suggests that it helped reduce the proportion of households that live under the Food Energy Intake (FEI) poverty line, with a reduction of this proportion by 7 percentage points over the life cycle of BISP. Rate of school enrollment is also higher in BISP beneficiary households and the increase in enrolment for girls has been greater, with the proportion of girls enrolled in school increasing by 30 percent between 2011 and 2019, compared to 20 percent for boys. BISP’s current targeting performance, however, is poor. According to data from 2015-16, almost one-half were not poor despite the move to a higher and more

40 The ILO Home Work Convention No. 177 from 1996 stipulates “equality of treatment between homeworkers and other wage earner”. However, the convention has only been ratified by 10 countries not including Pakistan.

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ambitious poverty line in 2016, and more than two-thirds were not eligible using the lower BISP cut-off of the bottom quintile of households. This is partly due to the fact that the instrument has not been updated for almost a decade, during which there has also been a substantial decline in poverty. Simulations using household data from 2016 suggest that expanding BISP horizontally and vertically, using the new NSER, assuming good data and implementation, can have a significant impact of about 4-5 percent reduction in poverty.

78. In light of the current COVID-19 crisis, the government will utilize different sources of data along with the NSER for identification of beneficiaries for many support initiatives and BISP to deliver cash support to the poor and vulnerable. However, implementation of Prior Action 7 - BISP Board has approved a Recertification Strategy, with clear protocols for entry and exit into the BISP Kafalat and CCT programs - programs will require the support of a strong communications campaign to help exiting of current BISP beneficiaries who may no longer be covered under the new program thresholds. The Bank is supporting BISP through the technical assistance component under the NSPP and will continue to do so as the series moves forward. An analysis of the impact is also under consideration.

5.2. ENVIRONMENTAL ASPECTS

79. The actions supported under the proposed DPF series are not likely to cause significant effects on the environment, forests, or other natural resources. The measures to improve quality and equity in education will contribute to awareness raising on social problems, including climate change and other important environmental issues. Securing financing for national immunization and improvement in access and quality of health services will give assurance of the stable and uninterrupted procurement and distribution of vaccines which are essential to prevent outbreak of specific diseases and for improved human health and well-being. In Pakistan, Hospital Waste Management Rules 2005 were enacted. These Rules describe the process of hospital waste management in an environmentally responsible manner, duties and responsibilities of personnel who engages in hospital waste management, preparation of a waste management plan in each hospital and inspection of hospitals and waste management facilities. However, a study showed that at the provincial level most facilities had poorly implemented the rules41. Similarly, most did not develop hospital waste management plans nor inspection system in the hospitals. While it is not significant, hospital waste generated as the result of Prior Actions 2A and B could have potential adverse effects. It will be important for hospital waste to be adequately handled, segregated, stored, transported, treated and disposed.

80. Capacity building activities have also been implemented in the government at each level – Federal Expanded Program on Immunization (EPI) under MNHSRC, EPI Cells in provinces, districts, and government hospitals through various measures, including hiring an Environmental Specialist at federal level and appointing waste immunization officers and staff in charge of health facility at provincial level and at hospital level, respectively. In addition, the Bank-financed NISP supports regular training as well as monitoring and record-keeping regarding waste management, and Environmental Audits in each hospital at all levels on waste management. Upcoming projects to be funded by the Bank will also strengthen health care waste management systems. For example, the recently prepared Pandemic Response Effectiveness in Pakistan Project, further capacity building measures will be undertaken, such as recruitment of an

41 Khan EA, Sabeeh SM, Chaudhry MA, Yaqoob A, Rana SM, Kumar R. Health Care Waste Management in Pakistan: A Situation Analysis and Way Forward. Pak J Public Health Vol. 6, No. 3, 2016

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environmental and social specialist and a health and safety specialist and ESMP revision incorporating latest WHO guidance on health care waste management including COVID-19 response.

81. Pakistan is extremely vulnerable to climate risks. These include risk of landslide and flooding in mountainous regions; rise in sea level, accelerating coastal erosion, increase in the frequency and severity of storm surges and flooding. Extreme weather events will grow in severity, with mean annual temperature rising by 1–3°C around 2050 and 3–6°C around 2100, depending on global efforts to curb GHG emissions, and the sea level rising by a further 60 cm at the end of the century.42 The SHIFT series does not include actions that can exacerbate these risks. In particular, the program actions that support adaptation/mitigation measures include (i) action to expand and improve targeting of BISP original program will lead to building the long-term resilience of the targeted beneficiaries (Prior Actions 5 to 7); (ii) action to support essential package of health services for primary health care will also address risks relating to vector-borne diseases that is predicted to rise due to rising temperatures and precipitation (Prior Action 2B); (iii) action to support National Education Policy Plan will lead to promoting better awareness on climate risks to students with the adoption of uniform national standards in the provinces (Prior Action 3).

5.3. PFM, DISBURSEMENT AND AUDITING ASPECTS

82. Public Financial Management and Accountability Assessment (PEFA). A PEFA prepared for the Federal Government in 2019 using the 2016 PEFA43 framework noted strengths and progress in key Public Financial Management (PFM) areas. These were due to ongoing reforms for improving PFM system in the country. Strengths were noted in budget formulation and execution, which are based on classifications using GFS/COFOG.44 PFM reforms have also contributed towards the roll-out of the Medium-Term Budgeting Framework MTBF to all ministries, focusing on multi-year planning and budget preparation for at least three years on rolling basis. Sector strategies are in place and preparation of a Budget Strategy Paper and the Medium-Term Budgeting Framework allow for timely communication of indicative budget ceilings to the line ministries. The recent adoption of the PFM Act is expected to help instill budgetary discipline, improve transparency and confidence in the spending of budgetary resources, improve cash management and strengthen the internal control framework.

83. The PEFA assessment also noted opportunities for improvement in several key PFM areas. For example, the Government is yet to develop an effective internal audit function (currently rudimentary) focusing largely on financial compliance as opposed to providing support to review and strengthen the internal control framework in line departments. Continuing efforts are also needed to improve effectiveness of revenue collection; while weaknesses were noted in the management of cash balances that impact the predictability in availability of funds. PEFA assessment highlighted the inadequacies in fiscal discipline evidenced in expenditure and revenue outruns, mainly due to the absence of an organic Budget law to discipline budget spending. Fiscal discipline has also been impacted by weaknesses in systems and capacity for legislative oversight, as well as compliance issues with instructions and guidelines at the budget formulation stage resulting in high-revenue and expenditure out-turns. There is also no clear

42 PK@100 Environmental Sustainability Policy Note.

43 Public Expenditure and Financial Accountability (PEFA) Program was established in December 2001 as a multi donor partnership. The PEFA PFM Performance Measurement Framework was substantially revised in 2016.

44 United National Classifications of Functions of Government.

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requirement for budget funds to be held in a Treasury Single Account (TSA), although instructions were issued to do so in April 2019. The cash management regime is also not sufficiently developed, resulting in various government entities holding cash in several accounts in commercial banks that are not linked to the TSA. There is no systematic method of evaluating the implementation of audit findings and recommendations and existing systems and capacity do not provide an enabling environment for effective legislative oversight. Also, given the lack of comprehensive, transparent and effective follow-up on external audit and budget reports, Parliamentary scrutiny does not support an effective or transparent accountability.

84. Ministry of Finance (MOF) discloses the Federal Budget, which is publicly available on its website. The budget document is comprehensive. It presents the budget by economic and functional classifications, estimated revenue outturns for the ongoing and upcoming fiscal year, medium term fiscal framework, output based budget estimates, and a narrative on the successful policy measures of the current fiscal year and new policy measures for the upcoming fiscal year. Supplementary budget or changes to the ongoing year’s budget made by the executive are also submitted to the Parliament alongside the budget documents for approval. Monthly execution reports are produced but not disclosed. Quarterly reports on national fiscal outturns are made available on the MOF website. Financial statements of the previous year are disclosed after being audited, usually nine months after the closing of the fiscal year.

85. Foreign Exchange Environment. An updated IMF safeguards assessment of the SBP was substantially completed as part of the EFF45 in December 2019. The assessment found that the SBP has maintained a broadly strong safeguards framework since the last assessment in 2013, except for its legal framework, in particular with regards to autonomy and governance. The financial reporting, external and internal audit mechanisms, and an enterprise-wide risk management framework all highlight sound practices. However, legislative reforms are necessary to strengthen SBP's autonomy and governance arrangements, and a medium-term strategy is required to phase out its involvement in quasi-fiscal activities. The consolidated financial statements of SBP and its subsidiaries for the financial year ended June 30, 2019, prepared in accordance with International Financial Reporting Standards (IFRS), were audited jointly by EY Ford Rhodes and KPMG Taseer Hadi & Co., and the auditors issued an unmodified opinion on these financial statements.

86. Disbursements and auditing arrangements. The proposed Credit will follow the WB’s standard disbursement procedures for development policy support. The proceeds of the Credit will be disbursed against satisfactory implementation of the program (specified Prior Actions achieved) and maintenance of an adequate macroeconomic policy framework. The WB will disburse the Credit proceeds, denominated in USD, into Pakistan’s foreign currency deposit account at SBP. SBP will then immediately ensure that, upon deposit in said account, an equivalent amount in PKR will be credited into the consolidated fund of the government Account No. 1-Non-Food held by the SBP, which will become available to finance budgetary expenditures. Within 30 days of the IDA Credit funds transfer, the Government of Pakistan, through its MOF, will provide the WB with a written confirmation of the amount deposited into Pakistan’s foreign currency deposit account at SBP and that the equivalent PKR amount has been accounted for in the country’s budgetary management system in an account used to finance budget expenditures. If the proceeds of the Credit or any part thereof are used for ineligible purposes, as defined in the Financing Agreement, the WB will require the Borrower to promptly return such amount to the WB. The amount refunded shall be cancelled from the

45 IMF Country Report No. 19/380 of December 2019

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Credit. No specific audit of the deposit of the Credit proceeds will be required given the moderate fiduciary risk assessed for this operation.

5.4. MONITORING, EVALUATION AND ACCOUNTABILITY

87. The responsibility for monitoring the implementation of SHIFT rests with the Federal MOF. The latter will be responsible for coordination, and will report to the Bank on the progress of implementation of the policy reforms in collaboration with the respective responsible federal and provincial government authorities including the MFEPT, MNHSRC, MPDSI, Ministry of Labor, BISP, and the provincial departments of Finance, Planning, Education, Health and Labor. A Bank multi-sectoral team will carry out supervision missions, provide technical assistance and policy advice to support reform implementation. Monitoring and evaluation of results indicators will be based on data available from the GOP authorities and verified by the Bank through the supervision of the series.

88. Citizenship engagement activities will be carried out throughout preparation of the DPF series and implementation. These activities involve a variety of stakeholders, including BISP beneficiaries, civil society organizations, religious organizations, Parliamentarian associations among others. These will be essential for the implementation of the series, given the expected resistance of social and religious norms, as well as of private sector interests to some of the actions (Prior Actions 3, 4 and 5), and the exit of existing BISP beneficiaries (Prior Action 7). Consultations led by the authorities with the support of the Bank will continue to be carried out, along with communication activities.

“Grievance Redress. Communities and individuals who believe that they are adversely affected by specific country policies supported as prior actions or tranche release conditions under a World Bank Development Policy Operation may submit complaints to the responsible country authorities, appropriate local/national grievance redress mechanisms, or the WB’s Grievance Redress Service (GRS). The GRS ensures that complaints received are promptly reviewed in order to address pertinent concerns. Affected communities and individuals may submit their complaint to the WB’s independent Inspection Panel which determines whether harm occurred, or could occur, as a result of WB non-compliance with its policies and procedures. Complaints may be submitted at any time after concerns have been brought directly to the World Bank's attention, and Bank Management has been given an opportunity to respond. For information on how to submit complaints to the World Bank’s corporate Grievance Redress Service (GRS), please visit http://www.worldbank.org/GRS. For information on how to submit complaints to the World Bank Inspection Panel, please visit www.inspectionpanel.org. ”

6. SUMMARY OF RISKS AND MITIGATION

89. The overall risk rating is assessed to be high. Macroeconomic risk is high, as the impacts of COVID-19 will weaken ongoing stabilization efforts and medium-term structural reforms and add additional COVID-19 related shocks. The government has committed to staying the course and will be supported by the World Bank, IMF and ADB to ensure this. The IMF recently approved a US$1.4 billion Rapid Financing Instrument (RFI) for bridge financing. Political risks are high because COVID-19 response adds uncertainty in the relations among the federating units. In addition, elite capture will continue to be challenging with more demands placed for concessions that can erode fiscal space. These

http://www.worldbank.org/GRS

http://www.inspectionpanel.org/

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risks are partly mitigated through the active engagement World Bank has across the federating units and through other ongoing and planned projects which will finance interventions on a sustained basis to achieve implementation results. (See Annex 6 for details). Institutional capacity risks are substantial because of weak federal-provincial coordination and technical capacity which may be exacerbated in the context of government’s measures to contain the spread of the COVID-19 virus. These risks are mitigated, in part, through provision of technical assistance for implementation and the World Bank’ extensive engagement with the provinces on reforms that require policy changes at their levels. In addition, this operation will be complemented by another DPF that focuses on fiscal management and competitiveness of the real sectors. Finally, the risk posed by the COVID-19 pandemic is also high. The authorities continue to implement measures to contain the outbreak with international support.

90. Pakistan’s macroeconomic risks are high. The low reserves position and high debt ratios limit the buffers that Pakistan could use to manage external risks. The global COVID-19 pandemic presents substantial economic risks. The pandemic-induced global crisis can further impact Pakistan through reduced demand for exports, import shortages, rising prices, lower revenues, and higher interest rates. USA interest rates hikes would affect Pakistan’s financing costs at a time when it will need to access financial markets to meet its large external financing needs. Lower oil prices can benefit external balances, given Pakistan’s reliance on imported fuel in its energy mix, but can also lead to a reduction of remittances from the gulf countries (an important source of remittances for Pakistan). Greater exchange rate flexibility and structural reforms will help mitigate these risks. On the revenue front, reforms to improve tax administration, widen the tax base and facilitate tax compliance are critical to mitigate fiscal risks. Other reforms supported under RISE DPF (fiscal and debt management and reducing the fiscal burden of SOEs) also work towards the mitigation of fiscal risks. Efforts to improve the regulatory framework for growth and competitiveness supported as well by RISE DPF will support a rebalancing of the economy even in the case of weaker external demand. In addition, the timing of this operation is aligned with the IMF program, which was approved in July 2019 and supports a policy framework to secure macroeconomic stability.

91. Political and governance risks are high. As social sector services are a devolved subject to the provinces, establishing consensus among federating units is challenging but doable with time. Extensive consultations with the government counterparts at the federal and provincial levels aimed at reaching consensus and aligning priorities have been and will continue to take place. Pakistan’s track record on reform implementation has remained mixed with those benefiting from status quo, elites, and systemic hurdles resisting the reform process both at the federal and provincial levels. However, there is strong ownership of the HC agenda both at the federal and provincial levels. SHIFT is underpinned by the IMF EFF and the proposed DPF on fiscal management and competitiveness. The policy reform under safety nets is expected to help mitigate part of the potential negative impact of the macro-adjustment in the poor and vulnerable.

92. Institutional capacity risks are substantial. SHIFT supports a multi-sectoral program at the federal and provincial level. There are many actors involved in reform implementation with different levels of capacity. The Bank continues to provide technical assistance to the different institutions. The government has a mechanism to make joint decisions among the federating units through the Council of Common Interests. The Bank pipeline will support implementation of the policy reform (see Annex 6).

93. Fiduciary risks are moderate. Taking into account the overall PFM environment and the foreign exchange control environment of the SBP, the fiduciary risk associated with the proposed operation is moderate. Given the ongoing PFM reforms, the IMF EFF program and the fact that the SBP has been audited regularly and received

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unmodified audit opinion for successive years, no further measures are proposed to secure satisfactory fiduciary arrangement for the proposed operation. It is expected that the proposed amendment to the SBP Act to strengthen autonomy, governance and mandate of the SBP, along with other recommendations that will be implemented through the EFF, will further strengthen the foreign exchange control environment of the SBP thus providing sufficient fiduciary risk mitigation for the operation.

94. Environmental and social risks are moderate. The actions under the proposed DPF are not likely to have negative impacts on the environment. Technical assistance is being provided to support the authorities in improving hospital wastage management systems, and further work will be carried out with the support from NISP. Overall, the SHIFT series will have a positive impact on the poor and vulnerable, as well as to decrease gender and provincial gaps in education, health and participation in labor markets.

95. Stakeholders risks are substantial. The policy reform under SHIFT supports actions geared to increase equity. The proposal of uniform education standards across schooling systems may encounter resistance from ethnic and religious groups, private sector stakeholders, as well as more broadly by provinces. Policy reform under Pillar B may encounter some resistance from the employers/industry because it can increase the cost of production in the value chain. However, such resistance is not very likely. Extensive consultations associated with communications campaigns are required so that beneficiaries of the reform may see its value-added. The BISP beneficiaries who might become ineligible after the renewed NSER can also create substantive resistance. However, clear communication and a well-established grievance redressal mechanism will help mitigate the risk.

96. Other risks: COVID-19 has caused an unprecedented risk to the world and Pakistan. Contraction of the fiscal space will potentially decrease spending in social sectors. Pakistan’s ability to weather the impact of the macro-crisis, exacerbated by the COVID-19 crisis, will depend critically on whether growth will be pro-poor and on how well the country will be able to protect its human capital and cater for the poor and vulnerable. The impact of the government’s fiscal package will depend on the quality of targeting, speed of implementation, and ability to stimulate economic recovery. This operation supports reforms that can help mitigate the impact of the pandemic in the poor and vulnerable through better coordination national safety nets.

Table 6: Summary Risk Ratings

Risk Categories Rating

1. Political and Governance ⚫ High

2. Macroeconomic ⚫ High

3. Sector Strategies and Policies ⚫ Moderate

4. Technical Design of Project or Program ⚫ Moderate

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5. Institutional Capacity for Implementation and Sustainability ⚫ Substantial

6. Fiduciary ⚫ Moderate

7. Environment and Social ⚫ Moderate

8. Stakeholders ⚫ Substantial

9. Other ⚫ High

Overall ⚫ High

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ANNEX 1: POLICY AND RESULTS MATRIX

Prior Actions and Triggers Results

Prior Actions under DPF 1 Triggers for DPF 2 Indicator Name Baseline (2019) Target (2023)



Indicative Trigger 1A. Provincial Cabinets approve a mechanism for a nationwide harmonization of birth and death registration with the national civil registry at NADRA.

Percentage of children under 5 with a birth certificate

36 % 41%

Prior Action 2A. The Ministry of National Health Services, Regulation and Coordination has approved the essential package of health services at community and primary health care center levels.


Indicative Trigger 2A. Ministry of Finance and provincial Finance Departments approve the inclusion of all remaining capital costs under the respective expanded program on immunization into the recurrent budget starting from FY21 to institutionalize national immunization.

Indicative Trigger 2B. Ministry of Finance and the provincial Finance Departments, in consultation with relevant line departments, approve costed plans for integration in the

Percentage of children age 12-23 months who received all basic vaccinations

66% 81%

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recurrent budget of essential primary health care vertical health programs.

Prior Action 3. The Cabinet has approved the National Education Plan 2020.

Indicative Trigger 3A. Ministry of Federal Education and Professional Training approves the National Student Assessment Framework

Number of national learning assessments conducted

0 1

Pillar B---Improving the contribution of women to economic productivity


Indicative Trigger 4A. Home-based Workers Bills move in federal Cabinet and Provincial Cabinets of Khyber Pakhtunkhwa and Balochistan.

Indicative Trigger 4B. Draft amendments on Shops and Establishments Act and Factories Act to provide better and safe working conditions for women including no restriction on working hours, toilets and childcare facility move in Provincial Cabinets.

Percentage of home-based workers registered (federal and provincial)

Of which female

Percentage of women working in shops, establishments and factories

0

10%

20%

70%

14%

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Pillar C---Improving national safety nets to respond to shocks in a more efficient manner


Prior Action 5B. The BISP Board has approved the plans for: (i) national expansion of the WeT Program; and (ii) implementation of nutrition sensitive conditional cash transfer program at the federal level, as stipulated in the Ehsaas Program.

Indicative Trigger 5A. Provincial Cabinets approve a coordination and collaboration mechanism for nutrition sensitive cash transfer described in a Memorandum of Agreement between the provincial governments and BISP under the Ehsaas Program.

Number of beneficiaries from COVID-19 safety nets response interventions (federal and provincial)

Number of beneficiaries of WeT program

Number of beneficiaries of nutrition sensitive CCTs (federal and provincial)

0

2.8 million

0

12 million

4 million

500,000

Prior Action 6. The BISP Board has approved revised data exchange protocols and socio-economic classification to be applied to the updated NSER data for ease of targeting by social programs, as stipulated in the Ehsaas Program.

Indicative Trigger 6A. BISP Board approves the statutory regulations for the governance of NSER to allow its independence from all programs (federal and provincial), including a governing committee with federal, provincial and other core stakeholders’ representation.

Number of households classified by welfare status and percentile in the updated NSER

0 22 million

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Prior Action 7. The BISP Board has approved the Recertification Strategy, with clear protocols for entry and exit into the Kalafat and conditional cash transfer programs.

Indicative Trigger 7A. Cabinet approves a framework allowing vertical expansion of BISP’s Kafalat Program with updated NSER, and a mechanism for the periodic update of regular cash transfer benefits.

Percentage of BISP beneficiary families covered from the bottom two quintiles

33% 70%

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ANNEX 2: FUND RELATIONS ANNEX

PRESS RELEASE NO. 20/167

IMF Executive Board Approves a US$ 1.386 Billion Disbursement to Pakistan to Address the COVID-19 Pandemic

April 16, 2020

• The IMF approved the disbursement of US$1.386 billion under the Rapid Financing Instrument to address the economic impact of the Covid-19 shock.

• With the near-term outlook deteriorating sharply, the authorities have swiftly put in place measures to contain the impact of the shock and support economic activity. Crucially, health spending has been increased and social support strengthened.

• As the impact of the COVID-19 shock subsides, the authorities’ renewed commitment to implement the policies in the existing EFF will help support the recovery and strengthen resilience.

The Executive Board of the International Monetary Fund (IMF) approved a purchase of Pakistan under the Rapid Financing Instrument (RFI) equivalent to SDR 1,015.5 million (US$ 1.386 billion, 50 percent of quota) to meet the urgent balance of payment needs stemming from the outbreak of the COVID-19 pandemic. While uncertainty remains high, the near-term economic impact of COVID-19 is expected to be significant, giving rise to large fiscal and external financing needs. The IMF support will help to provide a backstop against the decline in international reserves and provide financing to the budget for targeted and temporary spending increases aimed at containing the pandemic and mitigating its economic impact. The IMF remains closely engaged with the Pakistani authorities and as the impact of the COVID-19 shock subsides will resume discussions as part of the current EFF. Following the Executive Board discussion, Mr. Geoffrey Okamoto, First Deputy Managing Director and Acting Chair, made the following statement: “The outbreak of Covid-19 is having a significant impact on the Pakistani economy. The domestic containment measures, coupled with the global downturn, are severely affecting growth and straining external financing. This has created an urgent balance of payments need.

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“In this context of heightened uncertainty, IMF emergency financing under the Rapid Financing Instrument provides strong support to the authorities’ emergency policy response, preserving fiscal space for essential health spending, shoring up confidence, and catalyzing additional donor support. “In response to the crisis, the government of Pakistan has taken swift action to halt the community spread of the virus and introduced an economic stimulus package aimed at accommodating the spending needed to tackle the health emergency and supporting economic activity. Crucially, the authorities are increasing public health spending and strengthening social safety net programs to provide immediate relief to the most vulnerable. Similarly, the State Bank of Pakistan has adopted a timely set of measures, including a lowering of the policy rate and new refinancing facilities, to support liquidity and credit conditions and safeguard financial stability. In this context, the authorities’ policies should be targeted and temporary. “As the crisis abates, the authorities’ renewed commitment to the reforms in the existing Extended Fund Facility—in particular those related to fiscal consolidation strategy, energy sector, governance, and remaining AML/CFT deficiencies—will be crucial to entrench resilience, boost Pakistan’s growth potential, and deliver broad based benefits for all Pakistanis. “Expeditious donor support is needed to close the remaining balance of payments gap and ease the adjustment burden.” For information on the emergency financing requests approved by the IMF Executive Board, please see a link to the IMF Lending Tracker: https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending-Tracker

For upcoming discussions on the emergency financing requests, please see a link to the calendar of the IMF Executive Board meetings: https://www.imf.org/external/NP/SEC/bc/eng/index.aspx

IMF Communications Department

MEDIA RELATIONS

PRESS OFFICER: OLGA STANKOVA

PHONE: +1 202 623-7100EMAIL: [email protected]

@IMFSpokesperson

https://www.imf.org/en/Topics/imf-and-covid19/COVID-Lending-Tracker

https://www.imf.org/external/NP/SEC/bc/eng/index.aspx

https://twitter.com/IMFSpokesperson

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PRESS RELEASE NO. 20/73

IMF Reaches Staff-Level Agreement on the Second Review of Pakistan’s Economic Program under the Extended Fund Facility

February 27, 2020

Statement by Ernesto Ramirez Rigo, Mission Chief for Pakistan, on the second review of the Extended Fund Facility (EFF): "Following discussions between International Monetary Fund (IMF) staff and the Pakistani authorities in Islamabad from February 3-13 (see Press Release No 20/51), which continued from the IMF headquarters in recent days, IMF staff and the Pakistani authorities have reached a staff-level agreement on policies and reforms needed to complete the second review of the authorities reform program supported under the EFF. The agreement is subject to approval by the IMF management and consideration by the Executive Board, which is expected in early April. Completion of the review will enable disbursement of SDR 328 million (around US$450 million)."

IMF Communications Department

MEDIA RELATIONS

PRESS OFFICER: OLGA STANKOVA

PHONE: +1 202 623-7100EMAIL: [email protected]

@IMFSpokesperson

https://www.imf.org/en/News/Articles/2020/02/14/pr2051-pakistan-statement-at-the-conclusion-of-the-imf-mission

https://twitter.com/IMFSpokesperson

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ANNEX 3: LETTER OF DEVELOPMENT POLICY

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ANNEX 4: ENVIRONMENT AND POVERTY/SOCIAL ANALYSIS TABLE

Prior Actions Significant positive

or negative environment effects

Significant poverty, social or distributional effects positive or negative

Pillar 1. Strengthening CRVS, health, and education systems essential for HC accumulation


No significant positive or negative environment effects.

Positive impact on individuals with national registration.

Prior Action 2A. The Ministry of National Health Services, Regulation and Coordination has approved the essential package of health services at community and primary health care center levels.


Potential negative environmental effects from hospital waste generation.

Positive impact on individuals due to increased immunization.

Positive impact on individuals due to improved health care provision.

Prior Action 3. The Cabinet has approved the National Education Plan 2020.


Positive impact on individuals due to equality of opportunity in education, but potential negative impact on individuals from ethnic or religious backgrounds that may feel threatened by curriculum standardization.

Pillar B. Recognizing the contribution of women to economic productivity



The reform is intended to have positive effects on informal home-based workers, majority of whom are women. There may negative impacts for the home-based

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workers working with firms/global production chains as sub-contractors if the cost of hiring becomes too high.

Pillar C. Improving national safety nets to respond to shocks in a more efficient manner


Prior Action 5B. The BISP Board has approved the plan for: i) national expansion of the WeT Program (education CCTs program) and ii) implementation of nutrition sensitive CCT program at the Federal Level as stipulated in the Ehsaas Program.


The impact is expected to be positive on individuals who will continue to have access to basic education, nutrition and health services during the macro-adjustment period and will increase demand for education in the longer term.

Prior Action 6. The BISP Board has approved revised data exchange protocols and socio-economic classification to be applied to the updated NSER data for ease of targeting by social programs, as stipulated in the Ehsaas Program.


The expected impact is positive as improved targeting mechanism will be better able to allow for cash transfers to be delivered to those most in need.

Prior Action 7. The BISP Board has approved the Recertification Strategy, with clear protocols for entry and exit into the Kalafat and conditional cash

transfer programs.


The expected overall impact is positive as better targeted beneficiaries will benefit from cash transfers, but there may be others that will have a less positive impact due to exiting from the program.

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ANNEX 5: HUMAN CAPITAL INDEX – PAKISTAN

1. The Human Capital Index has an intuitive interpretation: the value can be understood as the productivity of the average worker in the future, as compared to the benchmark of effective investments in human capital, meaning full health (zero stunting and zero child mortality) and full education (full enrollment and no drop-outs until age 18, with learning levels at the “advanced level” in international assessments). It focuses on five core indicators and it is calculated using a methodology designed by the WB.46 It makes use of the most available and comparable data. The tables bellow provide a summary of computations on disaggregated HCI for Pakistan including the five indicators.47

Table 1: The main indicators underlying the Human Capital Index

HCI value

Not Stunted Rate

Harmonized Test Scores

Expected Years of Schooling

Learning Adjusted Years of Schooling

Learning Loss (Expected Years - Adjustment)

Survival to Age 5

Punjab 0.43 0.70 346 10.4 5.7 4.6 0.92

Khyber Pakhtunkhwa

0.42

0.60 359 9.7 5.5 4.0 0.94

Sindh 0.36 0.50 321 8.0 4.1 3.9 0.93

Baluchistan 0.34 0.53 333 7.8 4.1 3.6 0.89

Pakistan 0.40 0.62 340 9.3 5.1 4.1 0.93

46 Kraay, A. 2018. Methodology for a World Bank Human Capital Index. Policy Research Working Paper, No. 8593. World Bank, Washington, DC. World Bank. Patrinos, H. and Noam Angrist. 2018. “A Global Dataset on Education Quality: A Review and an Update (1965-2018)”. In process, World Bank. Angrist, N., D. Filmer, R. Gatti, H. Rogers and S. Sabarwal (2018). WDR 2019 Background Paper on Learning-Adjusted School Years.

47 Tables 1 and 2 are based on World Bank estimates using recent survey data. Data sources are DHS 2017-18, HIES, 2016, ASER 2018.

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Table 2: Underlying indicators for the gender disaggregated Human Capital Index.

HCI value Not Stunted Rate

Harmonized Test Scores

Expected Years of Schooling

Learning Adjusted Years of Schooling

Survival to Age 5

M W M W M W M W M W M W

Punjab 0.43 0.43 0.68 0.72 346 346 10.6 10.1 5.9 5.6 0.92 0.93

Khyber Pakhtunkhwa 0.45 0.39 0.62 0.57 360 358 11.0 8.2 6.3 4.7 0.94 0.94

Sindh 0.36 0.35 0.50 0.51 320 322 8.7 7.2 4.5 3.7 0.92 0.94

Baluchistan 0.35 0.32 0.48 0.58 338 324 9.2 6.1 5.0 3.2 0.88 0.90

Pakistan 0.41 0.39 0.62 0.63 342 338 10.1 8.5 5.5 4.6 0.92 0.93

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ANNEX 6: WORLD BANK PROGRAM AND SHIFT POLICY REFORM

HC PAKISTAN

Policy Lending - DPF

National Policy Reform: Securing Human Investments to Foster Transformation - SHIFT

Civil Registration and Vital Statistics

Universal Health Coverage Education, Learning and Skills Protecting the poor and vulnerable Empowering women

National Immunization Support Project (P132308)

Higher Education Development in Pakistan (P161386)

Proposed National Equitable Education Project (P173399)

National Social Protection Program (P158643)

KP Digital Project (P165684)

Proposed National Health Support Project (P172615)

Investment Lending

Punjab: Human Capital Investment Project (P164785)

Pandemic Response Effectiveness in Pakistan (P173796)

Balochistan: Proposed Human Capital Investment Project (P133608) Pakistan - Sindh Resilience Project (P155350)

KP: Proposed Human Capital Investment Project (P133609) Sindh Response to Stunting (P161624)

Sindh: Proposed Human Capital Investment Project (P167962)

Sindh: Proposed Early Learning Enhancement through Classroom

Transformation (P172834)

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Sindh: Proposed Improving Skills of Out of School Youth (P170434)

Punjab Skills Development (P120193)

Third Punjab Education Sector Project (P154524)

Balochistan Education Project (P144454)

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ANNEX 7: SAFETY NETS PROGRAMS IN PAKISTAN

Programs Details New/ Existing/ Expanded

Benazir Income Support Program (BISP)

BISP is a federal unconditional cash transfer Social Safety Net initiative of Government of Pakistan. Its long term objectives include meeting the targets set by Sustainable Development Goals (SDGs) to eradicate extreme & chronic poverty and empowerment of women through establishment of comprehensive social protection. BISP has a nationwide presence with headquarter in federal capital and 6 regional offices at provincial capitals, AJ&K and Gilgit-Baltistan. There are 6 regional, 34 divisional and 385 tehsil offices all across the country.

Unconditional Cash Transfers (UCT) Program

The Unconditional Cash Transfers (UCT) Program, the core program of BISP, was initiated in 2008. The short term objective of the program was to cushion the adverse impacts of the food, fuel and financial crisis on the poor, but its broader objective is to meet the redistributive goals of the country by providing a minimum income support package to the chronically poor and those who are more likely to be affected negatively by future economic shocks.

Targets: 4.5 million regular BISP beneficiary families

Total cost: $2.1 Billion

Implementing Agency:

Ehsaas/BISP

Existing

Supported under DPF PA 7

Conditional Cash Transfer (Waseela-e-Taleem)

WeT was developed by BISP in consultation with all the program stakeholders WeTProgram, a Co-responsibility Cash Transfer (CCT) Program of BISP that was initiated to financially support the primary education of 4 to 12 years old children of BISP beneficiary families for their enrolments and retention. Each beneficiary child receives a cash transfer of PKR 750 per quarter upon meeting the admission verification in 1st quarter and attendance requirement of 70% in subsequent quarters till completion of the primary education. It is part of the Graduation strategy aiming to link the Unconditional Cash Transfer (UCT) to attainment of human development goals.

Targets: 2.8 million families

Total cost: $ 275 million

Existing expanded

Supported under DPF PA 5A

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Ehsaas/BISP

Conditional Cash Transfer (Nutrition Sensitive CCT)

The program aims to prevent stunting in children under 2 years of age among the most vulnerable BISP beneficiaries focusing first 1000 days’ window of opportunity to break the intergenerational cycle of stunting.

Total cost: $ 77.7 million


Ehsaas/BISP

New – Pilot


Emergency Cash Grants

For immediate response the government used a mix of old and new NSER along with exclusion filters available in the NADRA database to identify the 12 million beneficiaries. 1st category of beneficiaries were the 4.5 million existing beneficiaries from the regular safety net program who got an increase in their benefit amounts for a period of 4 months. For the second category of 4 million beneficiaries a quota was allocated to provinces based on the respective population share. To meet this quota, various cut offs in the new and old NSER were decided and families were identified after passing through the NADRA’s exclusion filters. A system of appeals has been introduced by the government through an SMS service where CNICs of applicants are run through the list of eligible families for the second category to provide them the benefit of Rs 3000 for 4 months. For the third category, BISP has requested the provinces to identify potential beneficiaries and load CNIC information through a portal. These potential beneficiaries will be filtered through the existing beneficiary families information to avoid duplication and remaining will be taken through the NADRA filter to come up with a list to be included as beneficiaries to receive Rs 3000 for 4 months.

Total cost: $675 million


Ehsaas/BISP

New – One Time under Ehsaas to address COVID 19


Pakistan Poverty Alleviation Fund (PPAF)

PPAF is the leading institution focused on eliminating poverty in Pakistan. PPAF facilitates public-private partnerships that have a mutual goal to achieve social and economic change by addressing the multi-dimensional issues of poverty.


Existing

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PPAF

Microfinance Initiatives The Pakistan Microfinance Network (PMN) is the national association for retail players in the microfinance industry with a membership of 46 Microfinance Providers including Microfinance Banks (regulated by SBP) and Non-Bank Microfinance companies (regulated by SECP).


Multiple including PMN and NGOs

Existing

Zakat Zakat plays an important role in poverty alleviation. Apart from support to the poor and needy, it helps in re-distribution of wealth which curtails unemployment and reduces chances of economic recession. Zakat funds are utilized for assistance to the needy, indigent, poor, orphans, widows, handicapped and disabled for their subsistence or rehabilitation. A total amount of Rs 7377.678 million was collected during FY 2018-19 and distributed in bulk amongst the Provinces/Federal Areas.


Pakistan Bait-ul- Mal

Existing

Pakistan Bait-ul-Mal (PBM) PBM is significantly contributing toward poverty alleviation through its various projects and schemes by providing assistance to destitute, widows, orphans, invalid, infirm and other needy persons irrespective of their gender, cast, creed and religion through its establishment at the district level.


Pakistan Bait-ul- Mal

Existing

Workers Welfare Fund (WWF)

WWF is providing various services in the areas of housing, health and education to the industrial workers and financial assistance is also being extended in the form of death grant, marriage grant and scholarships.

WWF

Existing

Employees Old Age Benefits Institution (EOBI)

Employees Old Age Benefits Institution (EOBI) provides monetary benefits to old age workers through various programs such as Old Age Pension, Invalidity Pension, Survivors pension and Old Age Grants.

EOBI

Existing

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Note: By 2023, the number of families benefiting from unconditional cash transfers is expected to increase from 4.5 million to 5.5.million. With regards to WeT, the number of families is expected to increase from 2.8 million to 4 million. An additional number of 7.5 million families will be receiving the emergency cash transfer beyond the regular 4.5 million currently benefiting from unconditional cash transfers.

Documents

The World Bankdocuments1.worldbank.org/curated/en/...July 1 – June 30 CURRENCY EQUIVALENTS (Exchange Rate Effective as of March 31) Currency Unit PKR 163.35 = US$1.00 US$1.00 = SDR