Structural Adjustment Credit II

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The Second Structural Adjustment Credit supports the implementation of the Pakistani Government's poverty reduction strategy, which focuses on: 1) engendering growth by addressing the debt problem through fiscal consolidation and building the base for more rapid and stable export growth; increasing revenue mobilization; and strengthening the business environment; 2) improving governance, in particular, concentrating on tax administration reforms, devolving power to newly established local governments, improving public financial management, and reforming the civil service; 3) improving human development, specifically, the delivery of basic education, preventive health care, and family planning; and 4) improving social protection and employment opportunities by improving access to credit, redistibuting public lands, implementing community-based infrastructure programs, and providing direct cash transfers for the most needy. There are several risks to the implementation of this program posed by the country's indebtedness amd macroeconomic vulnerabilities, the possibility that a newly elected government may be unwilling to sustain the reforms, and constraints due to technical and institutional capacity. However, these risks can be offset by building a strong track record in reform implementation, the government's establishment of institutional and political mechanisms to help continue policies, and instituting technical assistance programs to support all the key areas of reform.