The following news was sent to ACHR by the Urban Resource Centre in Karachi Pakistan

  A letter of concern to the WB requesting no decisions on further loans until proper consultations occur

  The WB's response: the granting of  new loans

  The Citizen's response 

 

Posted June 14 2001

 

The concerns and comments to the right were endorsed by

Justice Rashid Rizvi, President, High Court Bar Association; 

Khursheed Tanveer, President Karachi Press Club; 

H.M.Younus Employees Trade Union Leader: 

Najma Sadeque, Journalist 
Activist; 

S Akbar Zaidi, Economist; 

Arif Hasan, Urban Planner/Architect; 

Habib Junaidi, Bank Trade Union Activists; 

Baseer Naveed, Peace Activists; 

Prof. M Noman, Academia; 

Aly Ercelawn, CREAD, NGO activists; 

Dr. Shershah Syed, General Secretary, Pakistan Medical Association; 

Mushtaq Gadi, SUNGI Foundation, 

Perween Rehman NGO Activists: 

Memood ul Hasan, General Secretary, Karachi Bar Association.  

How External loans can make things worse:

One example of the concerns expressed  is illustrated with the case of the Karachi Sewerage and Drainage Board projects

Besides serious design problems, this whole process exposed a number of things.  The costs of the KWSB’s projects are staggering not just because of their design, but because the external loans which finance them impose conditions which inflate their costs by five to twenty times what it would cost to design and build them using local know-how and materials.

    

CONDITION  1 
You have to use international consultants.  
The $2,500 per day it costs to fly in these guys, pay them and put them up at the Sheraton accounts for 20 - 30% of project costs.  And since these consultants can’t do everything themselves, they subcontract to local consultants, who then hire their own engineers and surveyors.  As a result, fully-qualified engineering staff in government’s line departments (who used to provide plans for public works like sewers and water supply systems) have nothing to do and become redundant.  Besides, there are masons, plumbers and people who understand sewers and water supply systems in almost every neighborhood.

CONDITION  2  
You have to make an international tender, and that means drawing up criteria for choosing a contractor, in which most Pakistani contractors - even the big ones - can never hope to compete with the really big Asian and European contractors. 

CONDITION 3  
You have to use international rates, which raise costs by 5 to 20 times the local rates.  For example, the Korangi project budget listed the cost of a box culvert at 48,000 Rupees per running foot.  But when OPP-RTI worked out the actual cost of labor and materials involved, it came to less than 3,000 Rupees!  When this escalation was questioned, the KWSB said this is “normal when there is going to be an international tender.”  Similarly, the costs of the treatment plants were  4 to 5 times what they should be.

CONDITION  4  
You have to purchase materials from certain countries or certain manufacturers, even if you are producing them yourself more cheaply in your own country.

 

7th June 2001

To

The President
World Bank
Washington D.C.
USA.                                                                                       

SUBJECT: 
PAKISTAN, Country Assistance Strategy Progress Report.

 Dear Sir,

We have come to know that you will be discussing the above report on June 12, 2001 in the meeting of the Executive Directors. In this connection we would like to draw your attention to the fact that during the resent public consultation on the World Bank s Country Assistance Strategy. Pakistani NGOs, CBOs, professionals, academicians, trade unions, citizens and media representatives voiced their concerns through discussion, slogans and walkouts in Karachi, Lahore, and Islamabad, regarding the manner in which the consultation was designed and the fact that most World Bank projects have been failures. In addition they expressed their reservations to the report since it failed to recognize that in spite of massive World Bank loans for poverty alleviation, poverty in Pakistan was on the increase and large scale environmental damage has taken place due to World Bank / ADB funded and designed projects. There is also a feeling that this increase is largely due to World Bank and IMF policies. Concerns were also voiced regarding World Bank conditionalities, which increase the cost of projects by two to three hundred percent of locally funded and executed ones. The paper circulated at the Karachi meeting by NGO and citizens is attached as an annexe.

Opinions were also expressed that the institutional deterioration, which has been given as one of the reason for World Bank failures has actually been caused by WB policies.

In view of the above and the attached paper, it is requested that no decision regarding the country assistance strategy should be taken until a proper consultative progress is undertaken. The design of this consultative process should be arrived at through consultation with representative of civil society and the real stakeholders in Pakistan.

Your sincerely,

Above concerns and comments (enclosed) are endorsed by 
those named in the right column.

c.c. Executive Directors of World Bank, Bank Group Senior Management, Vice President, Bank, IFC, and MGA, Bank Information Centre.

Pakistani, Press, Professional Bodies and NGOs, EC of Pakistan, Ministry of Finance

JUNE 12th 2001

Pakistan: World Bank Approves $350 Million Structural Adjustment Credit 

WASHINGTON, June 12, 2001-The World Bank Board of Directors approved a US$350 million Structural Adjustment Credit (SAC) for Pakistan. The single tranche balance of payment credit aims to support structural reforms underway in Pakistan, focusing on governance, economic growth and social service delivery.

 Pakistan: World Bank To Help Reduce Rural Poverty Through Increased Agricultural Production

 WASHINGTON, June 12, 2001-The World Bank approved a US$21.35 million credit for the North West Frontier Province (NWFP) On-Farm Water Management Project.

 

 

 

 

Following this announcement:

 

     

June 12 

Protest meetings against World Bank and IMF policies held in Karachi Pakistan

Two separate meetings were held to protest against WB and IMF policies on the eve of WB executive directors meeting in Washington DC to discuss Pakistan's progress report. A meeting held at the Pakistan Medical Association (PMA) whereas the other held on the lawns of Karachi Press Club (KPC) to air their resentment against the capitalist phenomenon of globalisation. Professionals from at both hoped that their voices would soon be heard in unison.

 Speakers at the PMA House emphasised the need for understanding the term globalisation in its true sense and its implications. They said the change in the form of globalisation was inevitable and we must be prepared to take on the challenge.

 Speaking as political activist of Social Democratic Movement Kaiser Bengali categorically stated that the army was consuming Rs 155 billion whereas only Rs 82 billion were being spent on development schemes. He argued that the mess could not be attributed to the World Bank or International Monetary Fund but our successive governments.

 Bengali said that the army had created its own Pakistan by establishing a parallel economy based on mills, banks, petrol business, transport, security agencies, and hospitals, which were often supported by the civilian economy. "International financial institutions are no angels but they are not the real enemies. The so-called enemies can be sent on 24-hour notice. All who have joined military government are traitors."

 Dr Asad Saeed, economic researcher at Applied Economic Research Centre, explained that the phenomenon of globalisation could be traced 200 years down the history with more or less same progress in terms of countries exports. Europe's total exports during 1870-1913 was 18.3 per cent of its GDP which could only improved to 22 per cent of the GDP in 1990, he added.

 Dr Asad Saeed clarified that the country's debt growth had started in 1980, which was not scheduled before Pakistan's geopolitical importance diminished drastically. About 30-35 per cent of Pakistan's annual development programme was donor-driven, he said.

 The Chairman, Pakistan Studies Centre, Dr Jaffer Ahmed, mentioned that the globalisation directly affected commoners through steps like privatisation and downsizing. He asked for an integrated process of thinking to be evolved amid the local objective conditions to come up with viable counter-strategy. He argued that the human rights violations increased with the emergence of globalisation. "Globalisation is a misnomer. It is nothing but capitalism", he said

 The meeting at the Karachi Press Club (KPC) demanded of the government not to seek any further loans in the wake of country's battered economy. They asked the government to take people into confidence before approving any inevitable loan and avoid agreeing on loans conditioned with anti-people measures.

Town Planner Arif Hasan said that a global protest against the international financial institutions had gained momentum with a strong stance against the multinational companies' unjust policies. He advocated changes in debt servicing in the best interests of the country besides demanding immediate refusal to the appointment of foreign experts. (TN June 13/2001)