• Evaluation department cites lack of political backing to reforms
• Report finds fault with bank’s performance

ISLAMABAD: The independent evaluation department (IED) of the Asian Development Bank (ADB) has expressed concern over insufficient political support to reforms, inadequate staffing and poor funding to development projects, resulting in suboptimal outcome of its $7 billion support over the past five years.

In evaluation of ADB’s Country Pakistan Strategy (CPS 2015-19), the IED also found fault with the Manila-based lending agency’s performance on operationalising institutional reforms, lack of analytical effort and overall desired outcomes of the CPS.

“The political environment led to inconsistencies in pursuing reforms in areas where ADB worked and following up issues identified with the portfolio. The government did not release counterpart funds on a timely basis and was unable to establish and maintain well-staffed and strongly incentivised project management units. This led to chronic implementation problems,” noted the evaluation report.

Moreover, executing and implementing agencies were poorly coordinated, particularly in energy where power generation and off-take were not synchronised.

At a more strategic level, the government did not provide sufficient guidance to the ADB portfolio in several sectors, the report noted while describing Pakistan’s performance.

Regarding ADB, the IED said its “performance fell short particularly on operationalising the institutional reform pillar. Indicators to mark progress in this area were lacking. There was a lack of rigor in the analytical effort”.

The CPS 2015–2019 was aimed to reduce poverty by creating opportunities for higher, inclusive and sustained growth through interventions in two strategic pillars. This included infrastructure development to improve economic connectivity and productivity for jobs and better access to basic public services and institutional reforms to cover policy, regulatory and administrative systems, as well as public financial management.

The programme focused on six sectors - energy, transportation, finance, public sector management, agriculture and natural resource and water and other urban infrastructure and services.

ADB financing approved during the CPS period amounted to $5.9bn up to mid-2019 but the overall programme under review included a carry-over of operations into the period to the value of $6.9bn.

In August 2019, ADB pledged a further $3.4bn in support to the International Monetary Fund’s Extended Fund Facility programme, $1bn of which in emergency budget support under a special policy-based loan, given the dire financial situation of the government.

The report said the ADB’s support in Pakistan was well received and the government had particularly praised the infrastructure support, but “ADB was not able to mount a fully coherent programme that would have enabled it to achieve the objectives of its two-pillar CPS strategy in all its sector engagements”. Also, the ADB made a contribution on infrastructure development but was “unable to maintain pressure” to achieve meaningful institutional reforms through a judicious combination of different modalities and support in critical reform areas.

It has vacillated on its role in social sectors and lost momentum in its drive to expand the role of Non-Sovereign Operations.

Hastily fashioned budget support with initial reforms attached had not always been followed in the past by persistent and robust support for full implementation of reforms.

The report said the government had remained fully committed and engaged in the CPS preparation and implementation, joint regulator reviews with ADB and jointly conducted regular missions to review implementation status of ADB-financed projects.

However, challenges were found in terms of limited understanding of ADB’s procurement guidelines and procedures, insufficient engagement of all stakeholders during processing, causing project implementation delays and absence of a fully functional internal approval mechanism leading to inefficient procurement processes.

Moreover, frequent transfer and posting of key project staff, particularly those dealing with procurement affected the outcomes.

It added that the government neglected in some cases to staff projects adequately. For example, the project monitory unit (PMU) of Regional Improving Border Services Project lacked dedicated project leadership and offered inadequate incentives to attract key staff.

The PMU of the Punjab Intermediate Cities Improvement Investment Project was also thinly staffed.

“This led to implementation delays, poor oversight and coordination and ineffective monitoring of safeguard measures”.

In some cases, the PMU was established very late, as for the Energy Efficiency Investment Programme, despite repeated urgings to the Ministry of Water and Power.

In particular, the NTDC could have ensured that it completed the upgrading of transmission lines before generation projects were commissioned.

The government should also have paid more attention to the timely disbursement of counterpart funds to ADB funded projects, avoiding some unnecessary delays.

At a more strategic level, the government did not shape the ADB portfolio within the context of its support from all its development partners.

In terms of the economy as a whole, ADB had not done the maximum to help Pakistan break the boom-and-bust cycle of growth followed by lapses in governance and balance of payments distress.

The flagship effort to reform PSEs did not amount to much and government commitment flagged in the period reviewed.

Published in Dawn, December 7th, 2020