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Pakistan

Budget Summary

Flag of Pakistan

Please note: All linked documents are in PDF format

Objective SO Number FY 2004 FY 2005 FY 2006
Primary Education and Literacy 391-003 28,000 66,673 66,703
Democracy and Governance 391-004 11,200 13,227 15,597
Emergency Economic Assistance 391-005 200,000 200,000 200,000
Economic Growth 391-006 10,200 17,000 17,000
Basic Health 391-007 25,600 50,700 50,200
Total (in thousands of dollars) 275,000 347,600 349,500

The Development Challenge: Pakistan is of unquestioned strategic importance to the United States. With 159 million people, it is home to the world's second largest Muslim population. Pakistan has been a key cooperating nation in U.S.-led counterterrorism efforts in South Asia, and over the past year has made progress in improving relations with its neighbor to the east, India, in the conflict over Kashmir, and with Afghanistan, its neighbor to the west. In its endeavor to develop its own economy and restore full democracy, Pakistan faces daunting challenges: poverty, low literacy, little foreign investment, sectarian strife, and terrorism. A stable, democratic, economically thriving Pakistan is vital to U.S. interests in South Asia. The 9/11 Commission Report recommended that the United States "should be willing to make the difficult long-term commitment to the future of Pakistan."

Following the military overthrow of an elected government in 1999, national elections in October 2002 partially restored civilian government, with a National Assembly, four Provincial Assemblies, and a Prime Minister. The President is also the Chief of Army Staff. However, the legitimacy of the elections and continued control by a pro-military alliance continue to be the subject of concern. Civil society is emerging as a mechanism of citizen voice and accountability in a climate where feudal, tribal, and military authorities have long dominated, but much more needs to be done. The legislative and judicial branches of government also need considerable strengthening to be fully functioning democratic institutions.

The Musharraf Government, with support from the United States and other donors in the form of debt relief, pulled Pakistan from the brink of bankruptcy in 2001. With strong financial leadership by Finance Minister Shaukat Aziz (who became Prime Minister in August 2004), Pakistan has shown the political will for macro-economic and fiscal reform. Real gross domestic product (GDP) growth accelerated from 2.9% in 2002 to 6% in 2003 and 2004, led by strong manufacturing growth, increased exports, and moderate service-sector and agricultural growth. However, progress in macro-economic reforms has not directly led to a decrease in poverty which remains widespread, particularly in agriculture, which constitutes roughly 25% of GDP but accounts for 50% of rural employment.

The current government also completed a Poverty Reduction Strategy and set ambitious targets for achievements in education, health, judicial reform, and the alleviation of poverty. Pakistan's literacy rate, among the world's lowest, greatly hampers its ability to become a modern, moderate state and to expand its economic base. Literacy averages 49% nationwide, but in remote tribal areas of the country can be as low as 0.5% for women. It is estimated that more than six million school age children are out of school. Because of the dearth of good public schools, hundreds of thousands end up in schools teaching only religious subjects (madrassahs). Public sector spending on education has increased slowly as the country emerges from its financial crisis, but is still low, around 1.9% to 2.2% of GDP. Continued high fertility rates -- well above four births per woman -- and the large number of youth mean that demand for schools, health care, water and sanitation services, and jobs will place increasing strains on Pakistan's fundamentally weak service delivery systems in the coming years.

The USAID Program: The Program Data Sheets provided below cover the four objectives for which USAID is requesting FY 2005 and FY 2006 funds. These four objectives concentrate on efforts to improve quality of education, increase reproductive health and health care services for women and children, build democratic governance, and increase rural incomes and create employment. These objectives not only address Pakistan's fundamental social and economic challenges, but also exemplify the long-term commitments needed to establish the United States as a reliable partner and ally to this strategically important nation. FY 2005 funds will be used to implement the ongoing programs of education reform, reproductive health and health care services, democratic governance, and increased rural incomes and employment. FY 2006 funds will be used to continue these ongoing efforts. The specific activities to be funded by FY 2005 and FY 2006 appropriations are described in more detail in the following Program Data Sheets.

Other Program Elements: The USAID South Asia Regional Initiative for Energy (SARI/E), managed by USAID in India, promotes regional cooperation between Bangladesh, India, Nepal, and Sri Lanka on common energy issues, including energy security and rural electrification. Pakistan, along with Afghanistan, became eligible participants late in 2004. The Global Health Bureau funds a program to promote birth spacing in Pakistan. ANE regional funds support cooperation between Afghanistan and Pakistan in independent media programs.

Other Donors: USAID is jointly financing several programs with other donors. These include partnerships with the Japanese to reconstruct 130 schools in the Federally Administered Tribal Areas (FATA); with the United Kingdom and the United Nations to raise the quality of and expand access to reproductive health services; with the United Kingdom to improve management of public healthcare resources and services at the provincial and district levels; and with the United Nations Development Program (UNDP) to improve community infrastructure, services, and participation in local governance. In addition, USAID and Switzerland are financing the launch of Transparency International/Pakistan to bring attention to corruption issues.

The United States, Japan, and the United Kingdom are Pakistan's three largest bilateral donors. Multilateral donors and their principal areas of focus include the Asian Development Bank (health, education, access to justice, roads and energy), the World Bank (health, microfinance, education, civil service reform, governance), and the UNDP (governance, election support). China has been the most consistent donor since the 1970s (primarily military assistance) and is perceived to be a close ally due to their unwavering political support over the past 30 years.

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Tue, 14 Jun 2005 16:03:52 -0500
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