Document of The World Bank FOR OFFICIAL USE ONLY Report No. 113574 INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL DEVELOPMENT ASSOCIATION INTERNATIONAL FINANCE CORPORATION MULTILATERAL INVESTMENT GUARANTEE AGENCY PERFORMANCE AND LEARNING REVIEW OF THE COUNTRY PARTNERSHIP STRATEGY FOR THE ISLAMIC REPUBLIC OF PAKISTAN FOR THE PERIOD FY15-FY20 May 18, 2017 Pakistan Country Management Unit South Asia Region The International Finance Corporation The Multilateral Investment Guarantee Agency 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 Group authorization. The date of the last Country Assistance Strategy 2015-2019 was May 2, 2014 CURRENCY EQUIVALENTS (Exchange Rate Effective May 8, 2017) Currency Unit = Pakistani Rupee (PKR) 1 US$ = 104.81 PKR FISCAL YEAR July 1 – June 30 ABBREVIATIONS AND ACRONYMS ASA Advisory Services and Analytics BISP Benazir Income Support Program CCT Conditional Cash Transfer CG Corporate Governance CPEC China Pakistan Economic Corridor CPS Country Partnership Strategy DFAT Department of Foreign Aid and Development DFID Department For International Development DISCOs Distribution Companies (Power) DPC Development policy credit EAD Economic Affairs Division FATA Federally Administered Tribal Areas FBR Federal Board of Revenue FCV Fragility, conflict, and violence FD Finance Department FY Fiscal Year GDP Gross Domestic Product GENCOs Generation Companies (Electricity) IFC International Finance Corporation IBRD International Bank for Reconstruction and Development IDA International Development Association IMF International Monetary Fund IPF Investment Project Financing IPP Independent Power Producer KP Khyber Pakhtunkhwa MDTF Multi-donor Trust Fund for KP, FATA and Balochistan MIGA Multilateral Investment Guarantee Agency MSMEs Micro, Small and Medium Enterprises NEPRA National Electric Power Regulatory Authority NER Net Enrollment Rate P&D Planning and Development Department PforR Program-for-Results PLR Performance and Learning Review PPP Public-private partnership RAS Reimbursable Advisory Service RTI Right to Information SBP State Bank of Pakistan SMEs Small and Medium Enterprises SOE State-Owned Enterprise SORT Systematic Operational Risk-rating Tool TAGR Trust Fund for Accelerating Growth and Reforms WB World Bank WBG World Bank Group World Bank IFC MIGA Vice President Annette Dixon Dimitris Tsitsiragos Keiko Honda Director Patchamuthu Illangovan Mouayed Makhlouf Merli Baroudi Task Team Amena Raja and Keiko Nagai Sahar Etezaz Petal Jean Hackett Leader(s) FY15-FY20 PERFORMANCE AND LEARNING REVIEW FOR ISLAMIC REPULIC OF PAKISTAN TABLE OF CONTENTS I. INTRODUCTION .................................................................................................................................... 2 II. MAIN CHANGES IN COUNTRY CONTEXT .......................................................................................... 2 A. CHANGES IN POVERTY AND SHARED PROSPERITY ................................................................... 2 B. MACROECONOMIC CHANGES ................................................................................................... 3 C. KEY COUNTRY DEVELOPMENTS ................................................................................................ 5 III. SUMMARY OF PROGRAM IMPLEMENTATION ................................................................................ 5 A. PORTFOLIO PERFORMANCE ...................................................................................................... 5 B. EVOLUTION OF PARTNERSHIPS AND LEVERAGING ................................................................... 7 C. PROGRESS TOWARD ACHIEVING CPS OBJECTIVES ................................................................... 8 IV. EMERGING LESSONS......................................................................................................................... 9 V. ADJUSTMENTS TO THE COUNTRY PARTNERSHIP FRAMEWORK .................................................. 11 VI. RISKS TO THE CPS PROGRAM ......................................................................................................... 13 Annex 1: Revised Results Framework for the Pakistan CPS 2015-2020 ................................................. 15 Annex 2. Matrix of changes to original CPF Results Matrix ................................................................... 24 Annex 3: Progress against original Results Framework ......................................................................... 32 Annex 4: IDA/IBRD, IFC and MIGA Commitments and Planned Pipeline............................................... 42 Annex 5: Progress Against CPS Results Framework ................................................................................ 48 1 I. INTRODUCTION 1. This document is the Performance and Learning Review (PLR) of the World Bank Group’s (WBG’s) Country Partnership Strategy (CPS) FY15-19 for Pakistan. The four results areas of the CPS - Energy, Private Sector Development, Inclusion, and Service Delivery – remain consistent with the Pakistan One Nation One Vision 2025, and are aligned with the WBG’s twin goals of eliminating extreme poverty and boosting shared prosperity. 2. Gains have been made in many areas by the midpoint of the CPS period. Progress, albeit uneven, has been made in stabilizing the macroeconomic situation, reducing load shedding in the power sector, increasing tax collection as a share of GDP, improving doing business, and investing in disaster and climate resilience. This progress was largely supported by the completion of a successful IMF program, an accompanying series of development policy credits (DPCs), and a ramp-up of IFC long-term investments. Challenges remain: education and health outcomes need to be improved (there has been no progress in reducing stunting for decades) and the tax base broadened, foreign and local investment is lower than expected, export competitiveness is falling, and privatization is stalling. Circular debt (cleared earlier) has piled up again nearly to its 2013 levels. While recent gains have been made in stabilizing security, it continues to be of concern. Rapidly changing geopolitics may pose additional risks to the country program. 3. All four of the CPS results areas remain relevant and largely on track with some changes proposed. There has been good progress toward indicators related to skills, energy, financial inclusion, public resource management, and social protection. Gaps remain in human development, the depth of the reform in privatization, and the financial stability of the energy sector. In agriculture, a disconnect between the results chain and Bank support to the sector has made it difficult to measure gains. The PLR is proposing some changes in the results matrix, including increased emphasis on displaced populations, stunting, and urban infrastructure and services. 4. The PLR proposes a one-year extension to the CPS to FY20 to align with the electoral cycle of the country and the IDA18 period. II. MAIN CHANGES IN COUNTRY CONTEXT A. CHANGES IN POVERTY AND SHARED PROSPERITY 5. The Government’s poverty line, announced in 2016, identifies as many as 54 million people to be targeted for pro-poor interventions. Pakistan’s poverty headcount declined from 64.3 percent in FY01 to 29.5 percent by FY14.1 At the provincial level, poverty remains concentrated in Baluchistan (56.8 percent poor people) and Sindh (34.18 percent). Punjab and KP have done much better, with headcount poverty rates at 25.3 and 27.6 percent, respectively. Urban poverty rates are far lower than rural poverty rates, especially in Sindh, where the rural poverty rate, at 50 percent, is more than 2.5 times as high as the urban rate. 1The trends in the rest of South Asia are similar. Between 2000 and 2010-11 the headcount poverty rate fell from 49 percent to 31 percent in Bangladesh, and from 37 percent to 22 percent in India. 2 6. Consumption growth has been robust for the last Figure 1: Consumption Growth 2001-2014 (HIES and decade and a half. The bottom forty percent have WB staff estimates) grown almost as fast as the top sixty. It has also been consistently more pro-poor in urban areas (Figure 1). 7. While income poverty has declined, the country struggles with human development outcomes. Pakistan has the world’s second-highest out-of-school population (6.7 million) and a relatively high population growth rate (2.1 percent). The needle has not moved on stunting (44 percent) in decades, and education and health outcomes have either flat-lined or shown slow progress. Gender gaps persist, with low female labor force participation (24 percent). Large disparities remain in development outcomes among provinces and between urban and rural areas. Expenditure on human development remains low at 3 percent of GDP, and the quality of public spending is poor. Critical data gaps remain, along with limitations in monitoring systems. Improved human development outcomes are a necessity for a prosperous Pakistan. B. MACROECONOMIC CHANGES 8. The macroeconomic outlook is stable since 2014, but remains challenging. Over the past three years, fiscal and external balances have improved significantly. Fiscal deficit (excluding grants) declined from over 8 percent in FY13 to 4.6 percent in FY16, and international reserves increased from 1.7 months to over 4 months of imports in the same period. Prudent economic management (supported by the IMF Extended Fund Facility), remittances, and foreign capital inflows contributed to this. Market perception of the country has improved: Standard and Poor’s raised Pakistan’s rating to B in October 2016; Moody’s upgraded to B3; MSCI’s upgrade to “emerging market” status is to be confirmed in June 2017. The Bank also resumed IBRD lending. 9. Having achieved macroeconomic stability, it is important for Pakistan to preserve its hard-earned gains in the near term (table 1). With the approach of the next electoral cycle and with the IMF program completed, macroeconomic risks have increased. In FY17, external and fiscal accounts have deteriorated. The current account deficit (2.0 percent) is 1.2 percentage points higher in July-March FY17 than in the same period in FY162. This is due to continuous weak performance of exports and the strong import demand driven by the China Pakistan Economic Corridor (CPEC). Remittances declined by 2.3 percent due to weak growth and declining public investment in Gulf Cooperation Council economies. International reserves coverage has declined to 3.6 months by end March 2017 from 4.2 months in June 2016. Weak revenue collection and strong growth in expenditures have led to a widening of the fiscal deficit (excluding grants) to 3.7 percent of GDP in July-March FY17; an increase of 0.3 percentage points compared to same period last year. Performance in tax collection is below target this year, after several years of improved performance. Debt-to-GDP ratio increased in FY16, partly as a result of revaluation losses, record high disbursements under external debt, and a strong build-up of government deposits. Debt is expected to gradually decline over the next three years, conditional on anticipated growth and fiscal tightening after 2 While reserves have increased since the start of the CPS period, they have declined from the US$18.9 billion peak in October 2016. 3 elections. The debt trajectory is sensitive to contingent liabilities and a real exchange depreciation shock. Reforms in areas that need improved collaboration between federal and provincial governments remain challenging. Table 1: Economic Performance 2014-2019 2014 2015 2016 e 2017 f 2018 f 2019 f Real GDP growth, at constant factor prices 4.1 4.0 4.7 5.2 5.5 5.8 Agriculture 2.5 2.5 -0.2 3.4 2.9 3.3 Industry 4.5 4.8 6.8 6.1 7.0 7.7 Services 4.5 4.3 5.7 5.6 5.8 5.9 Inflation (Consumer Price Index) 8.6 4.5 2.9 5.0 6.0 7.0 Current account balance (% of GDP) -1.3 -1.0 -1.2 -2.7 -2.6 -2.5 Financial and capital account (% of GDP) 3.0 2.0 2.1 2.6 2.6 2.3 FDI (% of GDP) 0.6 0.3 0.7 0.5 1.1 1.1 SBP Gross Reserves 10.5 14.8 19.4 18.6 18.5 17.8 Net foreign Fiscal direct balance investment (% of GDP) * (% of GDP) -5.5 -5.3 -4.6 -4.7 -5.1 -4.8 Tax revenue (% of GDP) 10.5 11.0 12.4 12.6 12.8 13.0 Debt (% of GDP) 64.4 64.1 67.5 65.7 64.3 62.0 Primary balance (% of GDP) * -1.0 -0.6 -0.3 -0.5 -0.9 -0.7 Sources: Government of Pakistan and World Bank staff estimates *: Excluding grants Notes: e = estimate, f = forecast. 10. Stalling energy reforms after initial gains. In 2013, in a coordinated approach with development partners including the WBG, the Government outlined an ambitious reform program for the energy sector that included carrying out tariff reforms, reducing circular debt, and privatizing power distribution companies (DISCOs). Following substantial tariff increases and some progress on reducing subsidies sector conditions improved somewhat. Private sector investment in generation has picked up. Nevertheless, the core problem of high levels of arrears owed by distribution companies to generators (the circular debt) remains and may return to 2013 levels. Consequently, the intensity of load shedding is expected to increase, in the near term affecting economic activity. Efforts to reduce the powers of the regulatory bodies, particularly National Electric Power Regulatory Authority (NEPRA) require careful consideration as these could result in inefficient costs being transferred to tariffs. 11. GDP growth is expected accelerate slightly over the next three years. Growth picked up to 4.7 percent in FY16, largely driven by large-scale manufacturing and the services sector, while the agriculture sector (24 percent of GDP) has stagnated. On the demand side, consumption has contributed to over half of GDP growth, while net exports and investment have had a limited or negative contribution. Growth is projected to reach 5.8 percent in FY19. To achieve its full economic potential, Pakistan’s investment-to- GDP rate of 15 percent has to double to be on par with the rest of South Asia. The roughly 2 million entrants to the labor force each year outstrip the jobs that the economy can generate at current growth levels. Growth acceleration will require deeper structural reforms at federal and provincial levels to be implemented by stronger public institutions and supported by better regulations and wider political commitment. Priority reforms include transforming the business environment, increasing the fiscal space to meet the large human and physical investment needs, and addressing critical energy and logistics bottlenecks. 4 C. KEY COUNTRY DEVELOPMENTS 12. Pakistan is maturing as a democracy, with the next elections in mid-2018. All major political stakeholders govern the country at the federal, provincial, and local levels. Decision-making remains highly centralized, and political consensus on key development priorities is elusive. With elections nearing, the political space for critical reform will be limited. Empowerment of the provinces under the 18th Amendment continues to deepen (albeit with challenges around service delivery). The Council of Common Interests, the inter-provincial body, is a work in progress. Most of the newly elected local governments in all provinces require significant strengthening. 13. The security situation remains a cause for concern. Pakistan, with its pockets of fragility, has seen a period of improved security resulting from military operations in vulnerable areas. Despite significant improvements in the security situation since the start of the CPS period, incidents against civilian and military targets continues, as witnessed during a week of spiked activity in February 2017 in all four provinces. This necessitates a cautious approach to managing the WBG’s footprint with an expanding program. 14. Half of Pakistan is expected to live in cities by 2032. Cities would be the major driver of economic growth and poverty reduction with urban areas currently contributing to over half the country’s GDP. Pakistan’s cities need sound governance, significant investments and efficient services to improve their livability and economic vibrancy. 15. The Federally Administered Tribal Area (FATA) is being mainstreamed in the next five years. It is currently governed by the Frontier Crimes Regulation of 1876 and has a separate political, judicial and administrative structure. It is scheduled to be brought into the Parliamentary and legal system—a process that could moderate drivers of fragility and help transition to peace and prosperity. 16. Geopolitics of the region are very complex and could have regional ramifications. CPEC could boost development prospects through estimated investments of US$56 billion in infrastructure (ports, transport, and industrial zones) and energy (of 10,000 megawatts). Relations with India and Afghanistan remain at pause. The pace of return of refugees to Afghanistan increased significantly in 2016. Pakistan continues to host the second-highest numbers of refugees in the world. III. SUMMARY OF PROGRAM IMPLEMENTATION A. PORTFOLIO PERFORMANCE 17. The WBG has delivered two-thirds of the envisaged CPS financing of US$11 billion.3 The IDA17 allocation of approximately US$3.4 billion will be fully utilized by June 20174. IBRD has committed US$895 million in investment operations and guarantees. IFC has committed US$2.5 billion in long- and 3 The CPS had envisaged an indicative envelope of approximately US$11 billion, including IDA and IBRD (US$2 billion); IFC investments of US$500-700 million; MIGA guarantees (US$50-200 million); and the Multidonor Trust Fund (US$200 million) for KP, FATA, and Balochistan. As a blend country, Pakistan was expected to have had access to approx. US$1.1 billion a year in IDA (on an indicative basis) as well as to IBRD. Pakistan is set to receive up to US$486 million under the IDA Scale-Up Facility in FY17. 4 The amount includes resources through SUF and part of the funds available from cancelled recommitments. 5 short-term investments. MIGA’s exposure increased by US$83 million. In addition, over US$360 million in trust fund resources were mobilized to complement lending and Advisory Services and Analytics (ASAs).5 18. The World Bank portfolio has a diverse mix of instruments and is performing well. The program currently deploys all Bank instruments: Development Policy Financing (US$1.8 billion plus US$0.42 billion in policy-based guarantee); Investment Project Financing (IPF) (US$5.4 billion plus US$0.4 billion in Partial Credit Guarantees (PCG)), including projects with disbursement-linked indicators; and Program-for- Results (PforR) operations (US$0.25 billion). Policy lending increased to complement the IMF program; the ambitious reform program is being supported through a number of DPCs focusing on growth, fiscal and energy reforms. The portfolio of 37 active projects amounts to US$5.65 billion, and is divided between the central government and the provinces: Equitable Finance and Institutions (US$0.25 billion), Sustainable Development (US$3.7 billion) and Human Development (US$1.7 billion). The disbursement ratio has been averaging 22 percent since FY14, and this trend is expected to continue. This ratio compares well with the average of approximately 18.5 percent for the rest of South Asia. 19. Regular federal and provincial portfolio reviews and supervision missions have helped resolve implementation issues in a timely manner. The performance of implementing agencies remains uneven, with generic client issues hampering start-up and implementation: slow approval processes; rapid staff turnover and the consequent impacts on capacity, including on monitoring, fiduciary, and safeguards; and duplication in disbursement procedures. Large hydro projects also face delays in land acquisition. There are currently two problem projects, and two more are anticipated. A biannual Project Director’s Academy has been constituted to address the problems with these projects. 20. IFC investments exceed the CPS targets at the mid-term. IFC has committed US$2.5 billion, compared to a base target of US$1.3-1.7 billion. This includes: US$1.4 billion (including mobilization) in long-term financing in renewables, infrastructure, financial inclusion, manufacturing, and agribusiness, and US$1.1 billion in short-term and trade finance. Key investments include CSAIL (US$125 million) to develop around 3000 megawatts of renewable projects, US$313 million in financial sector to further financial inclusion, and US$145 million to facilitate large international agri-business investment in Pakistan. The current committed investment exposure amounts to US$1.3 billion in 45 companies: 54 percent in infrastructure, 26 percent in financial markets, and 20 percent in manufacturing and services. IFC achieved over a three- fold increase in private capital mobilization (US$530 million)6 in the mentioned priority sectors. IFC is deploying a mix of long-term debt and equity instruments with just-in-time short-term trade finance facilities along with aligned Advisory Services (AS) engagements. The portfolio continues to perform satisfactorily. Non-performing loans (NPLs) are low primarily due to a few legacy projects and IFC’s equity performance in Pakistan is amongst the top ten globally for the Cooperation in 2017. High quality portfolio results have been achieved through proactive client engagement, including operational support and timely restructuring. IFC will continue to expand with a focus on creating markets in critical sectors and also explore opportunities under the IDA18 Private Sector Window (PSW) in the KP, FATA and Balochistan. 21. MIGA’s gross exposure in Pakistan has grown during the CPS period. The Agency’s current active program (US$345 million) is supporting hydropower projects (66.4 percent), financial services (23.6 percent), and manufacturing (10 percent). Over the CPS period, MIGA has added guarantees totaling US$83 million in the energy sector. Moving forward, the Agency will seek to expand its support, with particular attention to the critically important energy and financial services sectors. 5 These include the MDTF, TAGR, PTIPP, and others. 6 Against mid-term target of US$100-US$130 million 6 22. WBG advisory support is shaping evidence-based policies, pipeline development, knowledge transfer, and implementation support. The Bank’s ASAs are increasingly programmatic, linking multiyear efforts with outcomes in policymaking, pipeline development, and South-South knowledge transfer. The Bank delivered 29 of the 94 ASAs proposed for the CPS period covering such areas as the following: Karachi diagnostic, gender and social inclusion, energy, nutrition, population, poverty, public finance management, public investment, doing business, public-private partnership (PPP), financial inclusion, agriculture, water and climate change, regional trade and connectivity, and fragility. The Bank also delivered a Reimbursable Advisory Service (RAS), a new instrument in the program, now being expanded to two other engagements, including at the subnational level. IFC ramped up its advisory program in financial inclusion, investment climate, and clean energy. The current portfolio has 18 mandates (US$26 million) focused on banking advisory to financial institutions in critical areas (digital, sustainable finance, housing, gender); improving micro, small, and medium enterprises’ (MSMEs’) access to finance and building their capacity; off-grid energy and resource efficiency; investment climate; corporate governance, and PPP advisory for power sector privatization. Besides the programmatic work already initiated, the WBG pipeline of ASA/AS will include Pakistan@100: Shaping the Future (a strategic exercise), Systematic Country Diagnostics (including at the subnational level), public expenditure and investment reviews, and job diagnostics, leading up to the next Country Partnership Framework in FY21. 23. World Bank Group collaboration remains strong. The collaboration in energy continues to be strong and on track: policy reforms supported by the Bank have enabled market opportunities for IFC and MIGA to leverage and crowd in private capital (US$1.8 billion of private capital leveraged by the Dasu PCG), as illustrated by over US$4 billion in international and domestic investments in hydropower7 (Gulpur and Karot) and wind8 projects. The joint implementation plan will increase focus on crowding in commercial financing to further develop the market. Other ongoing areas of collaboration are doing business and financial inclusion (a JIP has been endorsed), while urban infrastructure and agribusiness are being explored. B. EVOLUTION OF PARTNERSHIPS AND LEVERAGING 24. Collaboration with multilateral and bilateral partners is leveraging better development outcomes. The Multidonor Trust Fund (MDTF) for KP, FATA, and Balochistan remains the single most important multidonor vehicle in Pakistan to support development interventions in these areas. Shifting partner priorities have led to lower than expected capitalization of the MDTF. Hence, through careful selectivity, priority is being given to livelihood development, governance, and jobs and enterprise development. The MDTF-financed projects are creating opportunities for International Development Association (IDA) financing in all three areas, and for IFC to deploy the IDA18 Private Sector Window. The IFC administered, Enterprise Asset Growth Program9 is supporting the MSME ecosystem development by enhancing access to finance and financial infrastructure and improving the investment climate to unlock growth potential. WBG programs are aligned with initiatives of bilateral partners, including the Department for International Development (DFID) and Department of Foreign Affairs and Trade (DFAT), in areas such as education, health, financial inclusion, social protection, and regional trade. AIIB is co-financing US$300 million for the Tarbela IV Additional Financing, and other opportunities to co-finance are being identified. Opportunities 7 US$ 2.8 billion 8 US$1.2 billion 9 A DFID Funded Trust Fund 7 to collaborate with China are being explored. Work continues with the Asian Development Bank in energy reform and the Islamic Development Bank on Central Asia South Asia (CASA-1000) energy import. C. PROGRESS TOWARD ACHIEVING CPS OBJECTIVES 25. The progress on all four results areas remains on track at the mid-term, with the exception of the two outcomes indicators on school enrollment. A detailed update is available in Annex 5 and a snapshot is given in figure 2 below. Figure 2. Results Update Note: N/A indicates data not yet available. a) Energy: WBG interventions have supported improvements in the overall performance of the energy sector, specifically, in generation, reductions in subsidies, and bill collections, diversification of the fuel mix and the improved fiscal sustainability of the energy sector. While these have resulted in increased private investment, circular debt continues to threaten the viability of the sector at the mid-term. Privatization of DISCOs and electricity generating companies has stalled. In the next phase, efforts will be focused on distribution, transmission, and renewable energy. b) Private Sector: A mix of budget support, investment operations and analytical work have supported improvements in the investment environment, with Pakistan emerging as one of the top reformers in Doing Business Report 2016. Good progress was also made in skills development and trade logistics. Privatization transactions were completed but with limited development impact. The indicator on major crop will be revised to align better with the program; ongoing operations support improved irrigation, supply chain linkages and Foreign Direct Investment 8 inflows. Going forward, WBG will focus on a wider range of doing business reforms, continue with a strategic and selective approach to privatization, and scale up on skills. The agriculture program will focus increasingly on creating markets for high value crops. c) Inclusion: Targets on financial inclusion (bank accounts and support to MSMEs) have been surpassed and cash transfer programs expanded to cover over 5.43 million women headed households. Disaster management plans have been operationalized in Balochistan and are under preparation for two additional provinces. Progress on girls’ enrollment is off track, as the net enrollment rate at the primary level has fallen by a percentage point to 62 percent. A lesson emerging is from the decade-long engagement in education is the need for reevaluating our approach. d) Service Delivery: Good progress has been made on indicators on maternal health, transparency and public resource management. Tax collection has shown some improvements, albeit limited given the potential. Primary gross and net enrollment rates have decreased by one percentage point since 2013. Multiple factors may have contributed to this stagnation in enrollment outcomes, including poor school infrastructure, lack of learning resources, and poor quality of teaching, in addition to demand-side constraints. The indicator has been both revised and scaled down. Multisectoral health interventions will be expanded in all provinces. 26. Cross cutting areas: a) With a Gender and Social Inclusion Platform operationalized, gender tagging in three dimensions has increased from 60 to 80 percent for FY15-17. The platform, focusing on women’s economic empowerment, also envisages positive impacts on voice and agency for women and youth such as through BISP, skills development and financial inclusion projects. Programs continue to mainstream gender, with good results from maternal health and cash transfer programs (BISP). b) Projects are informed by climate change considerations with estimated climate co-benefits of 30 percent. Operations to build resilience are under preparation or implementation in key areas, including water stress, urban, agriculture, fisheries, forestry and financial sectors. c) IDA and trust fund operations are helping improve peace- and state-building, with over 5.7 million people benefitting through MDTF operations. Operations will scale up in KP, FATA, and Balochistan, and continue to be informed by a stability/fragility lens. d) Gains in regional connectivity remain limited by the geopolitics of South Asia. CASA-1000 and the Central Asia Gateway project (under preparation), continue to make progress, albeit slowly. IV. EMERGING LESSONS 27. Structural reforms need a coordinated and country-wide approach. Reforms at the federal level have helped stabilize the economy. To sustain these and to accelerate growth, reforms at the federal level will need to be complemented by subnational structural reforms in the provinces. Performance of agriculture, urban development, human development, service delivery, all provincial subjects, has lagged behind and hence the urgency to act now. Reforms at the subnational level should be supported through a mix of instruments, including budget support. Improvements in the business environment requires reforms at the provincial level (especially Karachi and Lahore) for greater impact; fiscal space/revenue mobilization can be made more efficient by coordinating federal and provincial tax administration. DPCs will need to be complemented by reforms at the provincial level. 9 28. Where performance has lagged, a differentiated approach is required. Progress in achieving results in the energy sector and privatization to date has been uneven due to mid-stream political headwinds. Lack of progress in the privatization program, including of DISCOs, caused by lack of multi-party political consensus, has exacerbated the circular debt in the power sector. Therefore, ownership for such reforms needs to go beyond the Ministry of Finance and involve key line ministries at the federal level and across stakeholders. This requires better incentives, including selective/strategic use of WBG instruments, convening power and possibly reimbursable advisory services that could deepen ownership. The reform story in the energy sector has been mixed: ambitious power sector reform supported by DPCs fell short with policy reversals while gas sector reforms with strong political commitment, supported by technical assistance, are performing better. This suggests that the choice of instruments needs to be aligned with political commitment and implementation capacity. Another key lesson is that engagement with a wider political leadership and other stakeholders can pay dividends. Examples include: The Karachi engagement which used an agile process to build consensus resulting in a quick-wins project to build citizen-state trust; inclusive approach to designing the agriculture reforms in Punjab to be supported by a PforR; and an accelerated action plan for reducing stunting in Sindh which for the first time commits government’s own financing in addition to financing from development partners. 29. The Bank’s approach to human development needs to be rethought. School enrollment outcomes have remained static, despite billions spent over the past decade, including over US$2.5 billion by the Bank. Social protection programs have shown good results, especially for women’s economic empowerment and poverty reduction. While health has been under-invested in, gains have been made in maternal and child health. Nevertheless, more attention is needed to address stubborn issues such as high stunting and fertility. Migration and displacement require greater attention. A review of operations and results highlights the need for multisectoral approaches, phasing in policy and institutional reforms through results-based financing, better targeting for the most deserving areas and greater involvement of the private sector. 30. A more calibrated approach is necessary for highly complex reform efforts. The privatization effort started three years ago was very ambitious and capacity may not have been in line with the complexity of the undertaking. The government began with a highly ambitious agenda of privatizing 65 entities and only 5 transactions have been completed and the process is now stalled. Political headwinds, lack of communication with stakeholders, weak capacity and overall business sentiments contributed to this failure. Going forward, WBG should be more strategic, taking into account political economy realities and transactions that significantly reduce fiscal burden will be prioritized. Further expansion of the WBG program in this area requires enhanced political space and commitment. 31. Leveraging WBG instruments can help crowd-in commercial financing. Pakistan’s investment to GDP needs to double to be on par with the rest of South Asia. Besides improving business climate to attract private investments, there is also a need to close the large infrastructure gap (US$ 50 billion for the power sector and US$8 billion for Karachi). The WBG, through the energy joint implementation program, has made a start by addressing key policy constraints in the sector necessary to unlock private investments through budgetary support instruments like DPCs, as well as using innovative de-risking instruments such as the IDA PCG for Dasu to mobilize commercial financing. IFC and MIGA have followed through with sequencing of complementary investments to signal confidence in this sector and catalyze private sector investors. The recent IBRD Policy Based Guarantee approved with the competitiveness and growth DPC will further test international market response to Pakistan’s reforms. Where needed, use of de-risking instruments will be maximized to create further market opportunities, complemented by policy and 10 regulatory reforms. Examples include Karachi urban infrastructure, hydropower generation, Liquefied Natural Gas (LNG), solar and wind, and for the KP, FATA and Balochistan. 32. KP, FATA and Balochistan are complex but require interventions at scale. The needs have grown and scope exists for the WBG to go beyond limited trust fund financing. IDA support including through the Private Sector Window where eligible and appropriate) can be leveraged to support interventions to boost growth. Delivering and implementing operations in these areas remains complex due to the security environment and weak capacity. Experience from the MDTF highlights the importance of reverse missions and third party monitoring and validation where project staff cannot go on a regular basis. This has helped identify and address bottlenecks in a timely manner. Another key learning informing upcoming operations is the importance of geo/political economy analysis. This can help identify different power and opinion groups in beneficiary communities and accordingly inform the Bank’s approach. On gender, where the gap is wider, the current piecemeal approach has run its limits. The Gender Platform now gives a structure and form to more meaningfully supporting measures to close the gap, including in reducing gender based violence. Due to deep-rooted socio-cultural norms, results will be slow and incremental. V. ADJUSTMENTS TO THE COUNTRY PARTNERSHIP FRAMEWORK 33. The CPS selectivity filters remain valid10 and are being fine-tuned to address the lessons above and emerging country and IDA18 priorities. While overall progress has been made in poverty reduction, gaps remain in the associated human development indicators. The program will continue focusing on the government’s 4 Es of energy, economy, education and extremism. In energy and the private sector pillars, policy dialogue and technical assistance at the federal level, and investment operations, PforR and dialogue will complement interventions at the provincial levels. In the remaining areas of private sector development, inclusion, and service delivery, Bank teams will leverage synergies across all WBG instruments and products for transformative results. Outlined below are the proposed adjustments for each of the four results areas. a) Energy. Greater emphasis would be given to holding the line on the reform agenda and supporting investments in transmission, distribution, energy efficiency, and development of solar and wind, including unblocking private sector investment. With space for critical reform closing in the run up to elections, the program will focus on dialogue and technical assistance to identify inroads and interventions. b) Private sector. While keeping the existing focus outlined in the CPS, additional attention would be given to tourism, housing finance, long term infrastructure financing, and agriculture productivity. With privatization and SOE reforms stalling, support for structural reforms to improve fiscal space for the government by catalyzing private sector financing will continue through policy dialogue and technical assistance or through prior actions for subnational reform. WBG interventions will support increased domestic resource mobilization and improve public expenditure management at federal and provincial (Punjab, KP) levels. De-risking instruments to support critical reform will encourage private sector interventions, including in KP, FATA and Balochistan. While regional trade and trade facilitation work may slow down because of geopolitical factors, the Bank will increase its focus on enhancing connectivity to neighbors to the 10Twin goals and country priorities, along with transformative nature of projects, cross-sectoral initiatives, balance between federal/provincial and instrument mix, scaling up in KP, FATA and Balochistan, private sector development, and evidence-based decision making. 11 west. Increased gender filters will be applied to enhance development outcomes for women, with a focus on increasing their labor force participation. c) Inclusion. The program will scale up work on financial inclusion, including for women, and on MSME growth. It will increase its emphasis on displaced populations, including persons temporarily displaced from FATA. The IDA18 refugee sub-window will be accessed for a phased program supporting improved development outcomes for communities hosting Pakistan’s large refugee population. Interventions to increase fiscal resilience and national forecasting and warning systems will be boosted. d) Service delivery. The approach to improving health, nutrition and education outcomes will be revisited, with an emphasis on addressing the stagnant national school enrollment rates in the long term through improved targeting. Building on international experience, multisectoral interventions will be scaled up to enhance the response on stunting and malnutrition in all provinces. Increased emphasis will be given to addressing rapid urbanization, as city planning has not been able to keep up with the pace of rural-urban migration. A two-phased approach for Karachi city is proposed: a quick-wins project to build citizen confidence, followed by a multisector program to improve governance and municipal services (including for women’s mobility), with increased private sector participation. In Punjab, the Bank is developing a roadmap to improve governance and livability for medium-sized cities. 34. The Bank will scale-up its engagement in KP and Balochistan, with increasing client demand for larger-scale interventions that build on the MDTF. The planned engagement could include IDA operations on small-scale power generation, urban development, tourism, and agriculture. Resources will also be sought from the Private Sector Window and Refugee sub-windows. 35. Pakistan@100: Shaping the Future, a flagship ASA, will assess strategic directions up to 2047 with a focus on accelerated, sustainable, and inclusive growth. Other key analytics will include a jobs (and gender) diagnostic and work on stunting, poverty mapping, fiscal sustainability, and population. 36. Adjusted Results Framework. New or scaled-up indicators are proposed to reflect the adjustments above. As was noted in section III, changes have been proposed to indicators where achievements have been made or corrections were needed. In pillar one, the indicator on cost of production is revised to account for the impact of oil prices. Indicators on doing business, financial inclusion, and agriculture have been revised to better reflect the Bank’s enhanced program and strategy. On education, the outcome indicator has been revised to better reflect the flat-lining of results on net enrollment in recent years. Further details are available in Annex 2. Timeframe and Modalities 37. CPS timeframe and financing. The PLR proposes to extend the current CPS by one year to FY20, with the SCD to be delivered in FY19. This would align the current CPS to IDA18 priorities and the upcoming Country Partnership Framework to the priorities of the incoming Government. 38. Financing envelope for FY18-20. Tentative IDA, IBRD, IFC, and MIGA financing is provided below (table 2).11 Actual IBRD lending will depend on a number of factors; demand from other borrowers and IBRD’s 11All allocations are indicative. Any sub-national regions eligible for the Private Sector Window may receive resources on a case-by-case basis and based on the structure of IFC investment or MIGA guarantee supported by the PSW. The Private Sector Window allocations are not fixed and will be decided on a case-by-case basis. 12 overall financial capacity and country performance evidenced among other things by foreign exchange reserves of least 2½ months of imports of goods and services. The core indicative IDA18 allocation is in the range of US$2.9-3.7 billion, and Pakistan is also eligible for IDA18 non-core resources such as the Scale- up Facility, Regional Window, Refugee sub-window, and the Private Sector Window in applicable border areas. Trust funds would continue to be part of the program, with some exits. DPC share will be 30-35 percent of lending, and PforRs will increase for provinces. The program will continue with programmatic ASAs, including RAS. Delivering on IFC commitments will be dependent on investment climate reforms, removal of policy constraints in the infrastructure sector, and continued appetite of domestic and foreign investors to mobilize capital into the country. Table 2. Indicative WBG financing (in US$ billions) IDA IBRD IFC MIGA MDTF Total (max/approx) Original CPS (FY15-19) 5.5 2 2.5-3 0.05-0.2 0.20 11 Revised (FY15-20) 6.6* 2 3.5-4.2 0.05-0.2 0.30 13.3 *This excludes window allocations, including SUF VI. RISKS TO THE CPS PROGRAM Table 3: Systematic Operations Risk-Rating Tool Risk categories Rating12 1. Political and governance S 2. Macroeconomic S 3. Sector strategies and policies M 4. Technical design of project or program M 5. Institutional capacity for implementation and sustainability S 6. Fiduciary M 7. Environment and social M 8. Stakeholders M 9. Other – Security and Stability S Overall S 39. Broader political and governance risks could slow the program. With the 2018 elections nearing, a slow-down or even rollback in the reform momentum in key sectors such as energy and SOEs can affect outcomes. Opposition from political stakeholders and judicial actions can further slow decision-making. WBG teams continue to engage at different tiers and across political configurations at the federal and provincial levels. 40. Macroeconomic risks are Substantial. Macroeconomic risks declined over the past three years with the Government’s reform program supported by the IMF Extended Fund Facility and Bank’s budget support. In the first nine months of FY17, however, external and fiscal accounts have deteriorated. Circular debt has begun to rise again to earlier levels, as past issues have not been adequately addressed. Delays or rollbacks in much-needed structural reforms may weaken growth prospects and discourage private investment. Remittance flows might be affected if Gulf countries continue to face economic slowdown. Further deterioration of the fiscal and external balances would require a rethink of WBG instruments and program. The Bank will keep working closely with the IMF and other G-5 partners (Asian Development Bank, United Kingdom, United States) in supporting the country’s economic program to support stability 12 H = High, S = Substantial, M = Moderate, and L = Low. 13 and deepening structural reforms to accelerate growth. The government has signaled its intention to continue to seek budget support, which will require the maintenance of an adequate macroeconomic policy framework. The Bank is also using its technical assistance on tax policy and administration, fiscal and debt management to support government efforts to maintain fiscal discipline. 41. Security risks are Substantial. Pakistan Figure 3: Violent Incidents Trends (2013-2016) continues to be at risk of terrorism despite security stabilizing. Overall security incidents No of incidents Killed Injured 13 have reduced significantly by 2016 (figure 3), 8000 6932 however, the mid-February 2017 spike in 5308 incidents is a reminder the unpredictability of 6000 4725 the situation. In coordination with the UN, the 3503 WBG is updating its Security Risk Assessment, 4000 4569 which will guide the size and presence of the 2000 2167 1956 2555 2099 1887 operational footprint in the country. The 749 1097 security team and associated facilities are 0 being upgraded to provide additional support, 2013 2014 2015 2016 especially as operations scale up in KP and Balochistan. Third party monitoring, reverse missions, and virtual connectivity solutions will be increasingly utilized. 42. Institutional capacity for implementation and sustainability risks are Substantial. Going forward, the program is scaling up in politically challenging areas (urbanization, displaced/refugee hosting populations, agriculture) and working with lower capacity counterparts in KP, FATA and Balochistan. Continued dialogue at the highest levels of leadership in the federal areas and provinces will be needed to sustain the ongoing and planned efforts. Trainings to increase implementing agency capacity for fiduciary management and procurement will be conducted. Boosting investments in the country would require ramping up private sector engagement, including in upstream design of reforms. WBG’s instrument mix will provide platforms for engaging from national to local institutions, private sector to civil society, and across the political spectrum to deliver results. 13 Source: Pakistan Institute for Peace Studies (PIPS) Pakistan Security Report 2016 14 ANNEX 1: REVISED RESULTS FRAMEWORK FOR THE PAKISTAN CPS 2015-2020 CPS Outcomes and Indicators Indicative Milestones World Bank Group Program (on-going and planned) Overarching Goal: Poverty Reduction and Shared Prosperity RESULT AREA 1: ENERGY 1.1 Reduced Load Shedding Additional 500 million cubic feet of gas per day Ongoing Operations/Portfolio: available for electricity generation  IFC Energy Projects: (i) Uch-II Power, (ii) Laraib Energy,  Average daily hours of power (iii) Gulpur Hydro, (iv) Zorlu Energy, (v) Dawood TGL, (vi) load shedding reduced from Additional 6,000 MW of power generation Gul Ahmed Wind, (vii) Metro Wind, (viii) Engro Energy, eight hours in FY13 to five capacity financed by WBG of which 90% is from (ix)TriconBoston Wind Renewable Energy (hydro, wind and solar).  IFC and MIGA support: (i) Star Hydropower; (ii) Gulpur Hydropower 1,500 MW addition to the system facilitated by  IFC CSAIL platform & 720MW Karot Hydro Project; IFC wind and solar projects  IFC Engro LNG Terminal (600 MMCFD);  Tarbela 4th Extension Hydropower Project  Tarbela 4th Extension Hydropower Project AF 1.5 million people of poor households provided  Water Sector Capacity Development Project with access to clean solar lighting solutions  AKRSP Renewable Energy Community Carbon Finance 1.2 Reduced Cost of Production of 12,000 MW public and private investments in  Power DPC II Electricity power generation projects (hydro, thermal,  Dasu Hydro Power wind, biomass and solar) facilitated by WBG Pipeline Operations:  Weighted average cost of  IFC 5 wind (50 MW each); generation of WBG-supported  IFC 1 wind (250 MW) generation projects to be  IFC Solar IPPs (50-200 MW); below 10 c/kWh  IFC 1 RLNG based IPP  IFC 1 hydro (200 MW) 1.3 Improved Financial Policy guidelines on tariff mgmt. and subsidies  IFC 2 privatized distribution companies Sustainability of the Electric Power with pro poor targeting developed, adopted  CASA-1000 (2018) Sector and implemented  National Power Transmission Modernization Project  Dasu Phase II  Electricity subsidies (except for Publicly-owned generation companies Ongoing Advisory/ASA/TF Activities: the poorest) reduced from 1.8 (Gencos), distribution companies (Discos), the  Punjab Power; % of GDP in FY 14 to 0.6% of transmission company (NTDC) and the power  SBA for small renewable projects GDP in FY20 purchasing agency (CPPA) establish commercial  RE Mapping project (2017) relations.  NLTA Social Protection Systems for Energy Subsidy 15 CPS Outcomes and Indicators Indicative Milestones World Bank Group Program (on-going and planned)  Improved collection of billed  Macro TF (Energy Pillar): Power sector reform; gas electricity from 86 percent of First Report on the implementation status of sector reform billing in FY13 to 94 percent. the National Power Policy published by mid Demand Side Management (executed by IFC) FY15  Lighting Pakistan  Punjab Energy &Efficiency  MENA REDS  MENA Regional Resource Efficiency Program  E&S Standards in the Hydropower Sector RESULT AREA 2: PRIVATE SECTOR DEVELOPMENT 2.1 Improved Business Establishment of a virtual one-stop-shop (OSS) Ongoing Operations: Environment for Private Sector Regulatory framework for PPPs, credit bureau  Punjab Cities Governance Project & secured transactions approve and AML/CFT  FATA Urban Centers Project  Overall Distance to Frontier on law enacted  Growth DPC 2 and 3 Doing Business improves from Ongoing Advisory/ASA/TF Activities: approx. 49 in FY16 to 59 in At least four SEZs established  IFC Punjab Investment Climate FY20.  IFC Doing Business Project  Restructuring / Privatization of Enactment of key legislation (Companies Law,  Trade Finance at least 5 State-owned Corporate Rehabilitation)  Consumer Protection and Financial Literacy Enterprises (SOEs). Baseline:  Capacity Building of ICM no privatization transaction Key financial and non-financial information  Regional Competitiveness studies on 6 priority sectors about SOEs disclosed annually  Registration Reform took place in last 6 fiscal  Business SOE Reforms; CG Rules years. Corporatization of State Life Insurance  Pakistan National Risk Assessment on Anti Money Corporation Laundering Planned Advisory/ASA/TF Activities: Corporate Governance assessment of State  PPP Advisory for provinces Owned Insurance Companies  NLTA-Planning Commission  NLTA-Karachi Transformation  NLTA-Trade and tariff reforms 2.2 Increased Productivity in Farms 2.6 m ha. of irrigated agriculture areas are Ongoing Operations: in Selected Irrigations Schemes provided with improved water delivery  Sindh Water Sector Improvement  Sindh On-Farm Water Mgmt AF 630 000 farmers adopted improved  Balochistan Small Scale Irrigation technologies for efficient water use  Punjab Barrages Improvement II 16 CPS Outcomes and Indicators Indicative Milestones World Bank Group Program (on-going and planned)  Cropping intensity is increased Supply chains for linking of corporates to  Punjab Irrigated Agriculture Productivity Enhancement by 20% in selected water famers developed to improve capacity of over  Water Sector capacity courses areas 210, 000 farmers  Sindh Irrigated Agriculture Productivity Improvement  Sindh Water Sector Improvement AF Baseline: CI 105 in FY14 Steering Committee to monitor progress on  Sindh Agriculture Growth Project Target: CI 126 in FY20 recommendations set up in Punjab.  Sindh Barrages (Guddu) Project E-voucher based, targeted for potash fertilizer  Balochistan Integrated Water Resources Management introduced in Punjab  Pak Poverty Alleviation Fund  FATA -RLCIP  KPK Southern Area Development  IFC Engro Asahi project  IFC Engro Fertilizer Project  IFC Packages Project  IFC Matco;  IFC TPS,  IFC Crescent,  IFC Dewan  IFC FC Pakistan (Frieschland Campina)  IFC Coca-Cola Pipeline Operations:  Sindh Sukkur Barrage  Punjab Agriculture and Rural Transformation P4R  Punjab Irrigated Agriculture Productivity AF Ongoing Advisory/ASA/TF Activities:  Policy Notes: Irrigation, Wheat Procurement, agriculture markets land tenancy reform in Punjab  Public Grain Stocks and Price Stabilization Policy  Financing water and energy conservation projects  IFC Nestle Dairy Advisory  IFC Pakistan Sugar Advisory Planned Advisory/ASA/TF Activities:  IFC Advisory on Agri; Gender; Sustainable Finance;  Pakistan CC TA program 17 CPS Outcomes and Indicators Indicative Milestones World Bank Group Program (on-going and planned) 2.3 Improved Youth’s Skills for Performance management contract and tracer Ongoing Operations: Businesses studies institutionalized in skill development  Sindh Skills Development Project  Increase in number of trainees programs in Sindh and Punjab  Economic Revitalization Project in KP/FATA (MDTF) supported by skills development  Punjab Skills Project programs by 300 percent (with Job placement rate of graduates tracked Ongoing Advisory/ASA/TF Activities: gender disaggregation).  IFC Corporate Governance program for SMEs;  IFC Business Edge skills development program for SMEs Baseline: 35000  Financial Inclusion and Infrastructure Strategy Current: 74000  Women X Target: 120,000  Punjab SP NLTA Pipeline Operations:  Sindh Skills Follow-on  ERKF II – Additional financing of US$19 million being processed. Planned Advisory/ASA/TF Activities:  Jobs Diagnostic 2.4 Improved Trade tariff and A non-discriminatory Policy on International Ongoing Operations: Ports/Border Logistics Trade developed and approved by the Cabinet  Karachi Port Improvement Project  KPK Roads Project (MDTF)  The simple average statutory Special Statutory Regulatory Orders (SROs)  FATA Rural Roads Project (MDTF) tariff rate reduced to 10 percent granting tax exemptions are not issued by FBR  Pakistan Trade Facilitation Project (PTIPP) from 14.4 percent in FY13 except for those with Parliament approval.  IFC Qasim International Container Terminal Project  IFC Pakistan International Bulk Terminal (PIBT)  Improvement in occupancy rate Average waiting time at selected border  IFC Daewoo of targeted Karachi port berths crossing points reduced by 60 percent from  MIGA Guarantees to private sector: Bulleh Shah from 74 percent in FY13 to 50 (Wagah 6.5 hours’ average; Chaman and Packaging (Private) Limited percent. Torkhum 18 hours’ average in FY13) Planned Pipeline Operations:  Peshawar Torkhum Gateway to Central Asia Increase in the container handling capacity of  IFC investment in telecom, transport, logistics the port sector from 0.7 in FY11 to 1.12 M TEU  IFC investments in oil refining projects in FY17. RESULT AREA 3: INCLUSION 18 CPS Outcomes and Indicators Indicative Milestones World Bank Group Program (on-going and planned) 3.1 Improved Financial inclusion for Financial Inclusion Strategy, covering MSMEs, Ongoing Operations: MSMEs and Women rural finance, housing finance, payment  IFC: Global Trade Finance with 12 banks; systems, branchless banking, developed  IFC investments in 3 microfinance banks; 1 Bank Alfalah;  Number of MSME borrowers and 1 HBL increased by 60 percent from Capacity of commercial and microfinance  IFC investment in Abraaj Capital 2.95 million borrowers in FY13, banks, SMEs enhanced Pipeline Operations: with women borrowers  Financial inclusion & infrastructure project increased by 50 percent from 0.7 Credit information on MSME borrowers  Finance for Growth DPC million in FY13. available to all financial institutions  Housing Finance project  Number of accounts by financial Establishment of Secure Transaction Registry  IFC Global Trade Finance program roll over with 12 institutions increased by 45 banks; percent from 35 million accounts  IFC debt/equity in large/mid-sized banks (MSME focus) in FY13; with women accounts increased by 10 percent from 5.3  IFC forex credit lines to banks for clean energy projects million accounts in FY13  IFC investment in Pakistan Mortgage Refinancing Company  IFC MENA Distress Asset Relief Program  IFC Pakistan Infrastructure Bank  Provincial Trade and Competitiveness P4R Ongoing Advisory/ASA/TF Activities:  Financial Inclusion Support Framework (FISF)  Secured Transactions Collateral Registry ASA/IFC AS  NFIS RAS (completed)  IFC Gender Advisory with HBL; Alfalah  IFC agri advisory (HBL)  IFC Digital Finance Services advisory with NRSP  IFC Micro Housing Finance advisory with Khushali Bank  IFC SME Banking & supply with UBL and Meezan Bank Planned Advisory/ASA/TF Activities:  IFC Banks Advisory (MSME, Gender, Agri, Supply Chain Financing and Sustainable Energy Finance)  IFC advisory: Pakistan Mortgage Refinancing Company  SBP Partnership on financial inclusion, access to finance, mortgage finance and E&S /green banking  SBP RAS 19 CPS Outcomes and Indicators Indicative Milestones World Bank Group Program (on-going and planned) 3.2 Reduced Vulnerability for Improved reliability of poverty and shared Ongoing Operations: Groups at Risk prosperity data at national and provincial level  Social Safety Net Project  Floods Emergency Cash Transfer Project  Basic cash transfers for BISP SP systems strengthened in at least two  PPAF III Project beneficiaries expanded by 20 provinces for delivery of poverty targeted  FATA TDPERP percent from baseline of 4.5 initiatives such as health and nutrition focused Pipeline Operations: million beneficiaries in FY13; and conditional cash transfers and employability  National Social Protection Project interventions in selected districts.  AF for TDPERP Conditional Cash Transfers for  Refugee Program primary education expanded to Ongoing Advisory/ASA/TF Activities: Enhanced investments in human capital 40 districts from baseline of 5  Gender and Inclusion Platform amongst the poor through complementary districts in FY13. safety net graduation programs  NLTA Social Protection Reforms  Labor Supply and Vulnerability  Refugee program indicator: A Application of Social Safety net system in  Disaster Recovery and Social Protection Results indicator program will emergency situations  NLTA: Integrated SP Systems be identified once the activity is  NLTA International Migration sufficiently advanced, and will  Federalism and SP be reported in the CLR. Planned Advisory/ASA/TF Activities:  NLTA on poverty data with PBS 3.3 Increased Resilience to Multi-hazard risk assessments for major urban Ongoing Operations: Disasters in Targeted Regions areas prepared  Disaster and Climate Resilience Improvement Project  Sindh Resilience Project (SRP)  Number of provinces with Provincial DRM plans and SOPs updated Pipeline Operations: operational Disaster Risk Fiscal Disaster Risk Assessments and Disaster  Strengthening Hydro-met Forecasting and Early Warning Management and Early Warning Risk Financing Strategies developed Systems in Pakistan Ongoing Advisory/ASA/TF Activities: Systems increases from 0 in  GFDRR Strengthening DRM Institutions in Pakistan FY13 to 2 Planned Advisory/ASA/TF Activities:  GFDRR Pakistan DRM TA Program RESULT AREA 4: SERIVCE DELIVERY 4.1 Improved Public Resources Federal tax revenue increased from 9.3 percent Ongoing Operations: Management in FY12/13 to above 12 percent.  Punjab Public Management Reform Program  Punjab Cities Governance Improvement Project  Fiscally sustainable and inclusive growth DPC (1 and 2) 20 CPS Outcomes and Indicators Indicative Milestones World Bank Group Program (on-going and planned)  Tax revenue increased from 10 Active taxpayers with FBR increased from 1.04  Competitiveness and growth DPC percent of GDP in FY12/13 to million in FY12/13 to over 1.7 million (both  Sindh Public Sector Reform Project above 13 percent (by the end of income and sales tax).  KP/FATA/Balochistan Governance Support Project CPS period).  Punjab Jobs & Competitiveness Program – P4R Tax revenue by four provinces increased from Pipeline Operations:  Quality and timeliness of 0.7% of GDP in FY12/13 to above 1%.  Governance and Policy Project – KP government accounting,  Governance and Policy Project – Balochistan auditing and reporting improved  Revenue Mobilization Program – KP Tax base of UIPT in Punjab increased by 21% at Federal and Provincial level  Punjab Public Management Reform AF from 3.2 million in FY12/13; and properties against relevant PEFA scores  Improving Accountability for Service Delivery measured in FY12, FY13 and record digitized in at least 34 districts (from a baseline of 0 in FY12/13). Ongoing Advisory/ASA/TF Activities: FY16 (specifically PI-26 to PI-30  DFID TAGR of the PEFA 2016 Framework). Internal Audit Charter approved by Federal and  Punjab Social Sector PER Baseline: Sindh Governments  Punjab: primary school expenditure survey - PI 26 Internal Audit: KP (D+)  MDTF Subnational Fiscal Management Others (D) Six departments using E-procurement and 25%  Subnational Fiscal Policy Notes - PI 27 Financial Data staff trained for procurement processing  PEMFA exercise for KP and Balochistan Integrity: KP(B+) Punjab (B) Planned Advisory/ASA/TF Activities: Others (C+).  PEFA Updates (FY18 Federal, Punjab and Sindh) - PI 28 In-year Budget  Performance Management Assessment for Audit Reports: All (C+)  Credit risk rating for Punjab - PI 29 Annual Financial  DeMPA training (open to all SN) Reports: All (C+)  MTDS training (open to all SN) - PI 30 External Audit: KP and  Preparation of external debt manual for Punjab Sindh (D+) Balochistan (C+)  PROST training for Punjab PPF Punjab and Federal (B)  BOOST training for FD Punjab and P&D 4.2 Improved Access to Maternal- Increased provision of antenatal care services Ongoing Operations: Child Health and Nutrition Enhanced provision of institutional deliveries at  Third Partnership for Polio Eradication Project Services public health facilities  Punjab Health Sector Reform Project  Revitalizing Health Services in KPK  Percent Births attended by Public sector financing for private sector  National Immunization support project skilled health personnel provision of family planning products and  Enhanced Nutrition for Mothers and Children Project increased from 52 percent in services through Population Innovation Fund. Pipeline Operations: FY13 to 70 percent  AF for Enhanced Nutrition for Mothers and Children  Sindh Enhancing Response to Reduce Stunting 21 CPS Outcomes and Indicators Indicative Milestones World Bank Group Program (on-going and planned)  Increased use of modern Performance management and coverage  Sindh Multi-sector Action for Nutrition contraceptive methods from 26 evaluation studies institutionalized in  Sindh health Sector Reform Program percent in FY13 to 35 percent Immunization Program Ongoing and Planned Advisory/ASA/TF Activities: Plans for expanding multi-sectoral  WSP Provincial Sanitation TA  Increase child immunization by interventions for nutrition rolled out in all  Reproductive health/Population Policy Note/TA 20 percent from 54 percent in provinces  Hospital and Private sector FY13 to 65 percent.  Financial Risk Protection study Change in behavior of 5 million people and  National Immunization Coverage Evaluation  Proportion of 6-24 months’ 5,000 villages certified as ‘open defecation free’  Economic Analysis of Immunization in Pakistan children consuming a minimum to reduce the incidence of infectious diseases  Pakistan UHC Assessment acceptable diet increased from  Sindh PER 8 percent in FY11 to 20 Conditional Cash Transfer (CCT) program to percent. enhance access to nutrition services for the bottom quintile is piloted in Sindh and Punjab. 4.3 Increased School Enrollment Teacher recruitment against school specific, Ongoing Operations: needs-based teaching posts implemented in  Balochistan Education Support Project  School Participation Rate target provinces  MDTF Promoting Girls Education in Balochistan increased from 77% in FY12 to  Sindh Education Sector II 82%. (from 81% to 86% for Expansion of low-cost private schools in target  Punjab Education sector II male and from 72% to 77% for provinces  Tertiary Education Support project females)  GPE – Sindh and Balochistan Pipeline Operations: School specific non-salary budgets  Tertiary Education Support project II  Sindh Education & Skills Project Annual student achievement tests for grades 5  Pakistan College Education Project and 8 implemented in at least 3 provinces; and  FATA Education Project show positive trend in learning outcomes. Ongoing and Planned Advisory/ASA/TF Activities:  Early Childhood Care and Development (ECCD) TA  Education/Health Meta-Analysis Study  National Educational Assessment 4.4 Adoption of Performance and Right to Information (RTI) Acts passed and Ongoing Operations: Transparency Mechanisms in implementation mechanism established at  Punjab Cities Governance Improvement selected institutions provincial levels  Punjab Public Management Reform Program (PPMRP)  Punjab Land Record Management Project  KP/FATA/Balochistan Governance Support Project 22 CPS Outcomes and Indicators Indicative Milestones World Bank Group Program (on-going and planned)  Number of Services with citizen Periodic monitoring reports on Budget  FATA Urban Centers Project feedback increased from 13 Estimates for Service Delivery (BESD) at Federal  Sindh Public Sector Management Reform Project Services in FY14 to 26 Services level. Pipeline Operations: (in provinces).  GPP Projects KP, Balochistan, FATA  Punjab Municipal Services Improvement II  At least 8 provincial  Punjab Public Management Reform AF Departments with service  Improving Accountability for Service Delivery project delivery functions Ongoing Advisory/ASA/TF Activities: systematically collect and  MDTF Governance TA analyze performance data to  Strengthening Forum of Pakistan Ombudsman improve service delivery (from 0 Planned Advisory/ASA/TF Activities: in FY13).  WSP TA: Peshawar Water CO  TA on inter-governmental fiscal transfers to WASAs  Punjab Municipal Program II  Punjab Public Reform Management Project AF 4.5 Improved urban management Three year rolling integrated development and Ongoing Operations: in cities asset management plans implemented  PMSIP  Punjab Cities Governance Project  Indicator: Improved systems for Own-source revenues enhanced  FATA Urban Centres Project city management and Pipeline Operations: accountability in two selected Automated systems for access to information  Karachi Neighborhood Improvement Project provinces and grievance redress operationalized  Punjab Cities Program Baseline: 0 in 2013 Ongoing Advisory/ASA/TF Activities: Target: 5 in 2020 Inclusive platform for improved multi-  Karachi City Diagnostic stakeholder’s collaboration and citizen  Karachi FM Assessment and Credit Ratings participation in Karachi city operationalized  Sindh Growth Strategy Planned Advisory/ASA/TF Activities:  Housing Finance 23 ANNEX 2. MATRIX OF CHANGES TO ORIGINAL CPF RESULTS MATRIX In addition to extending the end date of results targets from FY2016 to FY2018, this PLR proposes the following changes to the CPS results framework. Outcome and Milestone Proposed Change and rationale 1.1: Reduced load shedding Indicator: Average daily hours of power load shedding No change reduced from 8 to 5 hours  Revised to reflect increased engagement in renewable energy: Additional 6,000 MW of Milestones: power generation capacity financed by WBG of which 90% is from Renewable Energy  Additional 500 million cubic feet of gas per day (hydro, wind and solar). available for electricity generation.  Added from outcome 1.2, refined for measurability: 1500 MW addition to the system  Additional 6,000 MW of power generation capacity facilitated by IFC wind and solar projects  Added to reflect scale up in off-grid: 1.5 million people of poor households provided with access to clean solar lighting solutions 1.2: Reduced Cost of Electricity Production No change in outcome Indicator: Average generation cost reduced from 12¢/kWh Revised to delink from fluctuating oil prices and to reflect WBG contribution: Weighted in FY 2013 to 10¢/kWh average cost of generation of WBG-supported generation projects to be below 10c/kWh Note: Weighted average cost of generation for IFC projects (which include 2 projects also Milestones: having MIGA support) is - 8.37c/kWh  12,000 MW public and private investments in Weighted average cost of WB projects is 3.25c/kWh power generation projects (hydro, thermal, wind, biomass and solar) facilitated by WBG  No changes  Level of WBG facilitated private investment for off-  Milestone moved and revised to outcome 1.1 grid solar, renewable and clean energy. 1.3: Improved financial sustainability of the power sector Indicator: Improved collection of billed electricity from 86% No change: Target has been achieved but not scaled up. The focus of WBG efforts will be to of billing in FY 13 to 94% support sustainability of the improved collection. Revised with no further Bank (or IMF) programs in this area: Electricity subsidies (except for Indicator: Reduced electricity subsidies (except for the the poorest) reduced from 1.8 % of GDP in FY 14 to 0.7% of GDP in FY20 poorest) from 1.8% of GDP to 0.4% Note: Government expects this level to be sustainable as it plans to restrict the energy subsidies to low-end residential and agriculture users and may further reduce it to 0.4% of Milestones: GDP. 24  Policy guidelines on tariff mgmt. and subsidies with pro poor targeting developed, adopted and No change in milestones implemented  First Report on the implementation status of the National Power Policy published by mid FY15  Publicly-owned generation companies (Gencos), distribution companies (Discos), the transmission company (NTDC) and the power purchasing agency (CPPA) establish commercial relations. 2.1 Improved Business Environment for Private Sector Indicator: The number of days required to start a business Revised to capture widening scope of WBG program: Overall Distance to Frontier on Doing decreases from 21 in FY13 to 15 days Business improves from approx. 49 in FY16 to 59 in FY20. Note: In case of methodology shift, the team will use the current methodology for the CLR. Milestone:  Establishment of a virtual one-stop-shop  No change in first two  Regulatory framework for PPPs, credit bureau &  3 revised to reflect scale-up: At least four SEZ’s established secured transactions approved.; AML/CFT law  4 dropped: urban management now reflected in pillar 4. enacted  Added to reflect winder range of reform: Enactment of key legislation (Companies Law,  At least one SEZ established Corporate Rehabilitation)  Improved urban management in targeted cities No change Indicator: Restructuring / Privatization of at least 5 State- owned Enterprises (SOEs). Baseline: no privatization transaction took place in last 6 fiscal years New milestones added to reflect the sustainability of the SOE reform and the current government strategy to corporatize, and reflect the commitment to transparency. Milestones:  Key financial and non-financial information about SOEs to be disclosed annually  Restructured and professional Boards of SOEs  Corporatization of State Life Insurance Corporation constituted and Corporate Governance Rules  Corporate Governance assessment of State Owned Insurance Companies applied 2.2 Increased Productivity in Farms in Selected Irrigations No change in outcome objective Schemes Revised to reflect align better with the Bank program (including the approach going forward Indicator: Increased yields of major crops (wheat, cotton, which will focus on high value crops rather than large crop yields) and to capture gains in rice) in selected irrigation schemes by 20 percent. water saving and efficiency: Cropping intensity is increased by 20% in selected water courses Baseline at country level: Wheat: 2,714 kgs/ha; Cotton: areas 815 kg/ha; Rice: 2,396 kg/ha. Baseline: CI 105 in FY14 25 Target: CI 126 in FY20 Milestones: Milestones dropped/revised/added to better capture WBG interventions. Two dropped as  Water Storage capacity increased by 295 million engagement in the areas has scaled down. cubic meters  1 dropped  Irrigation and drainage systems improved /  2 revised: 2.6 m ha. of irrigated agriculture areas are provided with improved water rehabilitated 2,632,011 hectares delivery  634,180 farmers adopted improved technologies for  3 revised: 630,000 farmers adopted improved technologies for efficient water use efficient water use  4 dropped  Grain silos established in provinces (especially in  5 revised: Agribusiness value chains strengthened by developing farmer’s capacity Sindh and Punjab)  New: Steering Committee to monitor progress on recommendations set up in Punjab.  Supply chains for linking of corporates to famers  New: E-voucher based, targeted for potash fertilizer introduced in Punjab developed 2.3 Improved Youth’s Skills for Businesses Indicator: Increase in number of trainees supported by Indicator scaled up as target was surpassed: Increase in number of trainees supported by skills development programs by 20 percent (with gender skills development programs by 300 percent (with gender disaggregation). disaggregation). Baseline: 35,000 trainees Baseline: 35,000 Current: 74,000 Milestones: Target: 120,000  Performance management contract and tracer  Revised for specificity: Performance management contract and tracer studies studies institutionalized in skill development institutionalized in skill development programs in Sindh and Punjab programs  Added to reflect skills and employability framework: Job placement rate of graduates tracked 2.4 Improved Trade tariff and Ports/Border Logistics No change in outcome objective Indicator: The simple average statutory tariff rate reduced Revised to streamline, second part of indicator moved to milestone level: The simple to below 10 percent, from 14.4 percent in FY13; and no average statutory tariff rate reduced to 10 percent from 14.4 percent in FY13 special Statutory Regulatory Orders (SROs) granting tax exemptions are issued by FBR except for those with Parliament approval. Added: Special Statutory Regulatory Orders (SROs) granting tax exemptions are not issued by FBR except for those with Parliament approval. Milestones:  A non-discriminatory Policy on International Trade Revised Indicator due to attribution issues. Second part moved to milestone level: developed and approved by the Cabinet improvement in occupancy rate of targeted Karachi port berths from 74 percent in FY13 to 50 percent. 26 Indicator: Average waiting time at Wagah Border reduced  Added from original indicator and scaled up: Average waiting time at selected border by 20 percent from 6.5 hours’ average in FY13; and crossing points reduced by 60 percent from (Wagah 6.5 hours’ average; Chaman and improvement in occupancy rate of targeted Karachi port Torkham 18 hours’ average in FY13) berths from 74 percent in FY13 to 50 percent.  Added to reflect IFC operations: Increase in the container handling capacity of the port sector from 0.7 in FY11 to 1.12 M TEU in FY17. 3.1 Improved Financial inclusion for MSMEs and Women Revised to reflect scaled up: Number of MSME borrowers increased by 60 percent from 2.95 Indicator: Number of MSME borrowers increased by 25 million borrowers in FY13, with women borrowers increased by 50 percent from 0.7 million percent from 2.95 million borrowers in FY13, with women in FY13. borrowers increased by 10 percent from 0.7 million in FY13. Indicator: Number of accounts by financial institutions Revised to align with NFIS and UFA targets: Number of accounts by financial institutions increased by 10 percent from 35 million accounts in FY13; increased by 45 percent from 35 million accounts in FY13; with women accounts increased with women accounts increased by 3 percent from 5.3 by 10 percent from 5.3 million accounts in FY13 million accounts in FY13 Milestones:  Financial Inclusion Strategy, covering MSMEs, rural  Added: Establishment of Secure Transaction Registry finance, housing finance, payment systems, branchless banking, developed  Capacity of commercial and microfinance banks, SMEs enhanced  Credit information on MSME borrowers available to all financial institutions 3.2 Reduced Vulnerability for Groups at Risk Indicator: Basic cash transfers for BISP beneficiaries Revised to increase target. New operations will focus on data updates rather than expanded by 20 percent from baseline of 4.5 million increasing number of beneficiaries: Basic cash transfers for BISP beneficiaries expanded by beneficiaries in FY13; and Conditional Cash Transfers for 20 percent from baseline of 4.5 million beneficiaries in FY13; and Conditional Cash Transfers primary education expanded to 25 districts from baseline for primary education expanded to 40 districts from baseline of 5 districts in FY13. of 5 districts in FY13. Milestones:  No change  Improved reliability of poverty and shared prosperity  Revised: SP systems strengthened in at least two provinces for delivery of poverty data at national and provincial level targeted initiatives such as health and nutrition focused conditional cash transfers and  Wider application of the Safety Net System in the employability interventions in selected districts. federal and at least 2 provincial programs  No change 27  Enhanced investments in human capital amongst the poor through complementary safety net graduation programs Indicator dropped due to duplication. This will now be part of indicator 4.3 which looks at increases in gross primary enrollment with gender disaggregation. Indicator: Increase girl’s gross enrollment rates for primary education by 15 percent from 63 percent in FY12 baselines New indicator to be added for the Refugee program: This will be identified once the activity is sufficiently advanced, and will be reported in the CLR 3.3 Increased Resilience to Disasters in Targeted Regions Indicator: Number of provinces with operational DRM and No change EWS increases from 0 in FY13 to 2 Milestones:  Multi-hazard risk assessments for major urban  Added to reflect a new area of engagement: Fiscal Disaster Risk Assessments and areas prepared Disaster Risk Financing Strategies developed  Provincial DRM plans and SOPs updated 4.1 Improved Public Resources Management Indicator: Tax revenue ratio increased from 9.3 in FY13 to Revised for simplification and to reflect scale up: Tax revenue increased from 10 percent of 11.5 percent at Federal level and no special exemptions GDP in FY12/13 to above 13 percent (by the end of CPS period). issued; improved collection in targeted provinces Milestones: Revised milestones to allow better measurement of progress looking at both federal and  Urban Immoveable Property Tax (UIPT) automation provincial: completed in 5 large cities of Punjab Federal:  Federal tax revenue increased from 9.3 percent in FY12/13 to above 12 percent.  Active taxpayers with FBR increased from 1.04 million in FY12/13 to over 1.7 million (both income and sales tax). Provincial:  Tax revenue by four provinces increased from 0.7% of GDP in FY12/13 to above 1%.  Tax base of UIPT in Punjab increased by 21% from 3.2 million in FY12/13; and properties record digitized in at least 34 districts (from a baseline of 0 in FY12/13). Dropped and moved to milestone level in outcome 4.2 and 4.3 28 Indicator: Non-wage recurrent expenditure by provinces in Revised for clarity: Quality and timeliness of government accounting, auditing and reporting education and health increased by 20 percent from PKR 50 improved at Federal and Provincial level against relevant PEFA scores measured in FY12, million in FY12. FY13 and FY16 (specifically PI-26 to PI-30 of the PEFA 2016 Framework). Baseline: Indicator: Quality and timeliness of government - PI 26 Internal Audit: KP (D+) Others (D) accounting, auditing and reporting improves at Federal - PI 27 Financial Data Integrity: KP(B+) Punjab (B) Others (C+). and Provincial level against PEFA scores of assessments - PI 28 In-year Budget Reports: All (C+) undertaken in FY12 and FY13 (specifically PI-22 to PI-25) - PI 29 Annual Financial Reports: All (C+) (P1-22 was rated D+ at Federal and B in Punjab in FY13; PI- - PI 30 External Audit: KP and Sindh (D+) Balochistan (C+) Punjab and Federal (B) 24 and PI-25 were rated C+ in Federal and Punjab in FY13) Note: There is a risk of PEFA assessment methodologies change in the coming years.  Revised to align better with indicator: Internal Audit Charter approved by Federal and Milestones: Sindh Governments  Intra-government transfer policies adopted  Revised to better align with work program: Six departments using E-procurement and  E-procurement strategy developed and 25 percent 25% staff trained for procurement processing procurement staff trained 4.2 Improved Access to Maternal and Child Health Revised Outcome: “Improved Access to Maternal-Child Health and Nutrition Services” Services Added to reflect engagement in stunting: Proportion of 6-24 months’ children consuming a minimum acceptable diet increased from 8 percent in FY11 to 20 percent. Added to reflect higher ambition:  Plans for expanding multi-sectoral interventions for nutrition rolled out in all provinces  Change in behavior of 5 million people and 5,000 villages certified as ‘open defecation free’ to reduce the incidence of infectious diseases  Conditional Cash Transfer (CCT) program to enhance access to nutrition services for the bottom quintile is piloted in Sindh and Punjab. Indicator: Percent births attended by skilled health Revised to scale up target: Percent births attended by skilled health personnel increased personnel increased from 52 percent in FY13 to 60 percent from 52 percent in FY13 to 70 percent Milestones:  Provincial plans for scaling up nutrition interventions Milestones moved to new nutrition indicator and replaced by: rolled out in all provinces  Increased provision of antenatal care services 29  Change in behavior of 5 million people and 5,000  Enhanced provision of institutional deliveries at public health facilities villages certified as ‘open defecation free’ reducing the incidence of diseases Indicator revised for scale up: Use of modern contraceptive methods increased from 26 Indicator: Increased use of modern contraceptive methods percent in FY13 to 35 percent from 26 percent in FY13 to 30 percent Milestone:  Revised for specificity: Public sector financing for private sector provision of family  Provision of family planning products and services planning products and services through Population Innovation Fund. through all public health outlets in Punjab No change Indicator: Increase child immunization from 54 percent in FY13 to 65 percent. Milestone:  Performance management and coverage evaluation studies institutionalized in Immunization Program 4.3 Increased School Enrollment and Adoption of Revised Outcome: “Increased School Enrollment” Education Quality Assessment Indicator: Gross enrollment rates for Primary (6-10 yrs) Revised Indicator: School Participation Rate increased from 77% in FY12 to 82%. increased by at least 10 percent from 68 percent (M:72 (from 81% to 86% for male and from 72% to 77% for female) percent; F:63 percent) in FY12 baselines Note: NER replaced with SPR - the share of children enrolled in school within a specific age cohort. This allows greater flexibility for late entrants into the system while NER only considers whether the right child is enrolled in the ‘right’ grade as per age. SPR is also more intuitive as it tracks progress towards reducing the number of out-of-school children. NER and SPR trends show that SPR is more consistent, allowing for more accurate forecasting. Indicator: Annual student achievement tests for grades 5 Dropped to milestone level as it does not measure improvements in learning and 8 implemented in at least 3 provinces; and show positive trend in learning outcomes.  Added: Annual student achievement tests for grades 5 and 8 implemented in at least 3 Milestones: provinces; and show positive trend in learning outcomes.  Teacher recruitment against school specific, needs- based teaching posts implemented in target provinces  Expansion of low-cost private schools in target provinces  Continued provision of school specific non-salary budgets 30 4.4 Adoption of Performance and Transparency Mechanisms in selected institutions Indicator: Departments / Services with citizen feedback in Refined and scaled up: Number of Services with citizen feedback increased from 13 Services place increased by 30 percent (from 5 Departments and 13 in FY14 to 26 Services (in provinces). Services with citizen feedback in FY14) Indicator: Service delivery units, with improved Revised to focus on provincial Departments’ performance management improvement: At performance management systems, increased from 0 in least 8 provincial Departments with service delivery functions systematically collect and FY13 to at least 4 analyze performance data to improve service delivery (from 0 in FY13). Milestones:  Revised as no plan for provincial RTI: Right to Information (RTI) Acts passed and  Right to Information (RTI) Acts passed and implementation mechanism established at provincial level implementation mechanism established at national  Milestones 2 and 3 replaced and a more relevant milestone added: Periodic and provincial levels monitoring reports on Budget Estimates for Service Delivery (BESD) at Federal level.”  Improved performance management framework developed for service delivery units  ICT-based data collection, analysis, presentation and disclosure mechanisms, set up in selected provinces 4.5 [NEW] Improved urban management in cities New Outcome added to reflect increasing engagement in urban sector: Improved urban management in cities. Indicator derived from the Corporate Results Indicator “Cities with improved livability, sustainability and/or management”. It measures the cumulative number of cities/municipalities for which WBG supported interventions have resulted in improvements in financial, economic, environmental, and/or social sustainability; and/or city planning, systems, and governance. Indicator: Improved systems for city management and accountability in two selected provinces Baseline: 0 in 2013 Target: 5 in 2020 Milestones:  Three year rolling integrated development and asset management plans implemented  Own-source revenues enhanced  Automated systems for access to information and grievance redress operationalized  Inclusive platform for improved multi-stakeholders’ collaboration and citizen participation in Karachi city operationalized 31 ANNEX 3: PROGRESS AGAINST ORIGINAL RESULTS FRAMEWORK Results Area 1: Energy Outcome and Milestone Progress Outcome Area: 1.1: Reduced load On track: NEPRA/Ministry of Water and Power data shows daily load shedding reduced to 5.8 hours. shedding Note: this data is for the winter months and requires further monitoring during the remaining period. Indicator: Average daily hours of Bank supported Power Reform DPC series (US$1.1 billion) and lending of US$ 2.5 billion in large public power load shedding reduced from 8 hydro and transmission-Dasu (2160MW), Tarbela Extension (2820MW), CASA 1000 (1000MW). to 5 hours IFC invested US$ 880 million (including mobilization and MIGA guarantees) in hydro and renewables: Milestones: CSAIL (3000 MW); 2 hydro IPPs (822 MW) and 4 wind IPPs (300MW total). Mobilization facilitated  Additional 500 million cubic feet of around US$473 million from private investors and DFIs (CDC, Proparco, OPIC, FMO, ADB, IsDB, DEG, gas per day available for electricity etc.) generation.  Additional 6,000 MW of power 8302 MW of power generation capacity: Dasu (1080 MW), Tarbela 4 & 5 (2820 MW), IFC CSAIL (3000 generation capacity MW), CASA 1000- (1000 MW), IFC LNG Terminal (4.5 million tons/year), IFC Wind Projects (300 MW), IFC/MIGA Gulpur Hydro (102 MW), Karot Hydro (720MW) Outcome Area: 1.2: Reduced Cost of Electricity Production Indicator: Average generation cost On track with questions of attribution: Decline in oil price has led to a reduction in production cost reduced from 12¢/kWh in FY 2013 to to below 10 cents/kWh (PKR 10.4/kWh). 10¢/kWh The cost of production, including generation, transmission and distribution (thus taking account of Milestones: losses) was PKR 12.33/kWh in 2013. Using the same parameter but stripping out the effects of the oil  12,000 MW public and private price change, cost of production in 2016 was PKR 11.65/kWh (with the oil price changed factored in, it investments in power generation is PKR 8.87/kWh). projects (hydro, thermal, wind, biomass and solar) facilitated by 8,302MW have been facilitated by WBG at the mid-term (see above) WBG  Level of WBG facilitated private Under IFC Lighting Pakistan, solar lighting solutions provided to 400,000 poor populations in FY15-16. investment for off-grid solar, renewable and clean energy. Outcome Area: 1.3: Improved On track; reported collections by Discos reached an aggregate 94.6 percent and aggregate losses were financial sustainability of the power reduced to 17.9 percent in FY16. sector 32 Indicator: Improved collection of billed Revenue protection program (under DPC1) will lead to improved collections. In FY14, collection of bills electricity from 86% of billing in FY 13 increased to 89%. The plan to reduce circular debt by MOF and MoWP has also been finalized (DPC2), to 94% however, circular debt was recorded at US$0.3 billion in Dec 2016. Revenue protection plans have not been introduced by any of the Discos. Indicator: Government subsidies On track with limited progress expected: Power subsidies in FY15 reduced to 0.8 percent of GDP due reduced from 1.8 % of GDP to 0.4 % to tariff increase and reduction in supply cost. In FY16, they were reduced to 0.7 percent including non-cash costs. Milestones:  Analytics on acceptance of reforms to electricity subsidies and pro-poor options, using the  Policy guidelines on tariff mgmt. National Socio Economic Registry, has been completed. and subsidies with pro poor  Establishment of commercial relations between public sector power entities was part of DPC- targeting developed, adopted and 2. The issuance of the Market Rules, Central Power Purchasing Agency-Guarantee Limited implemented (CPPA-G) separation and National Transmission and Dispatch Company license modification  First Report on the implementation were completed in 2015. IFC supported to preserve the risk allocation structure under the legal status of the National Power Policy framework and maintain the sanctity of the Pakistan IPP program. published by mid FY15  ASA underway to support the gas sector reform by creation of a two tier market to allow import  Publicly-owned generation of LNG; unbundling of Sui companies and allow third party access to gas sellers. companies (Gencos), distribution  IFC was appointed as the financial advisor for privatization of Gujranwala Electric Power companies (Discos), the Company (Distribution Company) and Jamshoro Power (Generation Company). Due diligence transmission company (NTDC) and and transaction restructuring reports are complete, but privatization program has stalled. the power purchasing agency  Issues: Stalling in the privatization program will create gaps in the financial sustainability plan (CPPA) establish commercial of the government especially in case of dealing with circular debt. The accuracy of results is relations. dependent upon data collected from govt. sources. The Government’s plan to amend the NEPRA Act has been stalled by the courts. If successful, this would signal a reform roll-back. Results Area 2: Private Sector Development 2.1 Improved Business Environment for Private Sector On track: The number of days to start a business has decreased to 18. The Bank Group is scaling up Indicator: The number of days required its engagement in this area, especially at the Federal through the DPCs, and in Punjab and Sindh to start a business decreases from 21 in through short and mid-term action plans agreed upon with Provincial Governments. FY13 to 15 days  Virtual and Physical OSS was established. Milestone:  Key reforms completed include: i) enactment of Credit Bureaus Act 2015 and amendment 2016;  Establishment of a virtual one-stop- ii) enactment of Secured Transactions Act 2016; iii) efficiency improvement in property shop (OSS registration procedures through automation in land records in Karachi and Lahore; iv) more  Regulatory framework for PPPs, clearance of exports/imports through automation of cargo clearance procedures; v) time and credit bureau & secured cost reduction related to business registration in Karachi and Lahore, through automation and 33 transactions approved.; AML/CFT process re-engineering; vi) improvements in online tax filing; vii) amendments to the Financial law enacted Institution (Recovery) Ordinance fully enacted; viii) amendments to the AML/CFT law  At least one SEZ established  Seven SEZs approved and notified, of which four are operational. Indicator: Restructuring / Privatization Achieved: The Privatization Commission (PC) has completed the strategic sale (88% of shares) of of at least 5 State-owned Enterprises National Power Construction Company (NPCC). The other four companies, where equity stake was (SOEs). Baseline: no privatization divested by GoP, were: United Bank Limited UBL (19.6%), Pakistan Petroleum Limited PPL (5%), transaction took place in last 6 fiscal Allied Bank Limited ABL (11.5%) and Habib Bank Limited HBL (42.5%) years  Achievements: (i) Training imparted to officials of line ministries, senior management and Milestones: board members of select SOEs, senior officials of SECP, MOF, EAD, etc. on the Public Sector  Restructured and professional Companies (Corporate Governance) Rules 2013. (ii) Best practice note shared with the Boards of SOEs constituted and corporate regulator in appointing boards of SOEs and CEOs. (iii) Comprehensive report on key Corporate Governance Rules financial and non-financial information of federal SOEs placed on MOF website. (iv) Rapid applied Corporate Governance assessment completed for State Life Insurance Corporation.  The privatization agenda has been stalled due to political push back but the Bank will continue to push through strategic guidance in selection of privatizations and gradual implementation. 2.2 Increased Productivity in Farms in Selected Irrigations Schemes Indicator: Increased yields of major Unclear due to indicator targeting: Progress difficult to ascertain for major crop yield increases. crops (wheat, cotton, rice) in selected irrigation schemes by 20 percent.  The Balochistan IWM project and others will finance the construction of small dams which will Baseline at country level: Wheat: 2714 contribute to increase the water storage in both provinces. kgs/ha; Cotton: 815 kg/ha; Rice: 2396  1.17m ha provided with improved irrigation and drainage services under Sindh Water Sector kg/ha. Improvement Project; 0.9m ha under Punjab Irrigated Agriculture and 0.55m ha under Sindh Irrigated Agriculture. Balochistan Small Scale (BSSIP) that finished in Dec 2014 also added 3700 Milestones: ha. Under the Sindh Agriculture Growth Project, the focus is to improve the productivity and  Water Storage capacity increased market access of 112,000 small-medium producers in important commodity value chains. by 295 million cubic meters  IFC also initiated 2 agribusiness advisory services for small farmers in value chains of Nestle (84  Irrigation and drainage systems farmers reached) and Coca Cola, and invested US$145 m (debt and equity) in FC Pakistan-dairy improved / rehabilitated 2,632,011 cooperative. IFC also committed US$80m (debt) in Coca-Cola; and US$30 m in international hectares cement business (Numba Yaakiba) of which US$15 million booked in Pakistan; and US$18 m in  634,180 farmers adopted improved short term finance in Levis International through which cumulative disbursements amounted technologies for efficient water use to US$41.27m/622 transactions in FY 15 and US$144.56m/2480 transactions in FY 16.  Grain silos established in provinces  Grain silos projects failed to attract bids and suitable private sector participation and the IFC (especially in Sindh and Punjab) engagement with the provincial governments have closed. 34  Supply chains for linking of  To date, 380,000 farmers benefited from new/improved irrigation and drainage services under corporates to famers developed Sindh Water Sector Improvement Project. 2.3 Improved Youth’s Skills for Achieved: Over 80,000 trained in various skill sets Businesses  Over 75,000 beneficiaries trained in Sindh and Punjab through Skills Development Projects  Performance management contracts introduced in both Punjab and Sindh Skills Development Indicator: Increase in number of Projects. Tracer studies are also a part of the recently approved Punjab Skills. trainees supported by skills  Under the Women Entrepreneurship project, 500 women entrepreneurs were trained in development programs by 20 percent Karachi and Lahore. (with gender disaggregation).  8432 individuals trained in management skills, of which 1126 were women. IFC Business Edge Baseline: 35,000 trainees Program and IFC Corporate Governance (CG) advisory facilitated training of 770 (72women) directors and managers in CG skills Milestones:  The Punjab Social Protection Reforms TA is working with newly created Punjab Social Protection  Performance management contract Authority to improve access to training, employment, and business development specifically and tracer studies institutionalized for poor and vulnerable youth in Punjab. in skill development programs 2.4 Improved Trade Tariff and Ports/Border Logistics Indicator: The simple average Some progress: Slight progress in trade promotion through a reduction in the average statutory tariff statutory tariff rate reduced to below rates. The average rate has decreased to 13.4% in FY16. 10 percent, from 14.4 percent in FY13; and no special Statutory Regulatory  Government approved its Strategic Trade Policy Framework 2015-2018 (STPF) that steers the Orders (SROs) granting tax exemptions trade program till 2018. The Bank provided analytics to inform STPF recommendations. are issued by FBR except for those  Under Pakistan Trade and Investment Policy Program (PTIPP), the Bank has shared analytics to with Parliament approval. contribute to regional trade, including pieces on gender and on transit trade and export competitiveness. Additional work on tariff rationalization, under-invoicing, import content of Milestones: exports is underway.  A non-discriminatory Policy on International Trade developed and approved by the Cabinet Indicator: Average waiting time at On track: Average waiting time has been reduced from 6.5 hours in FY 13 to 3.5 hours in FY 16 while Wagah Border reduced by 20 percent operational berth occupancy is at 56 percent. from 6.5 hours’ average in FY13; and  IFC invested over US$12 m (including mobilization) in Pakistan International Bulk Terminal for improvement in occupancy rate of expansion. targeted Karachi port berths from 74  Completion of the first Time Release Reports (TRS measures every step in the cargo clearance percent in FY13 to 50 percent. process) of Wahgah Border (with India) and Torkham Border (with Afghanistan). Key recommendations on Wagah border TRS have been recently implemented 35  Review of Pakistan’s transit trade regime and compliance requirements for private sector  Trainings on Risk Management and Integrated Transit Trade Management and Inspections  Creation of an automated environment that allows self-assessed electronic declarations  Rolling out of WeBOC at border, creation of Customs stations of Torkhum, Chaman and Taftan and risk management system for hazardous cargo, business intelligence tool for border crossing points, and WE-NET (Women Entrepreneurs Network) to improve trade facilitation. Results Area 3: Inclusion 3.1 Improved Financial inclusion for MSMEs and Women Indicator: Number of MSME Achieved: The number of microfinance and SME borrowers has increased to 4.33 million in FY16, an borrowers increased by 25 percent increase of 47% (for women borrowers, the increase has been 41%). from 2.95 million borrowers in FY13, with women borrowers increased by 10 percent from 0.7 million in FY13. Indicator: Number of accounts by Achieved: Accounts have been increased to 45 million borrowers, an increase of 29%. Gender financial institutions increased by 10 disaggregated data is projected to be available in late FY17. percent from 35 million accounts in FY13; with women accounts increased National Financial Inclusion Strategy for Pakistan (NFIS) has been developed. The WBG has supported by 3 percent from 5.3 million accounts the implementation of NFIS across several areas including digital transaction accounts, SME finance, in FY13 housing finance, secured transactions, infrastructure finance, Islamic finance. Milestones: TA is provided to build capacities for MFIs to better utilize credit report data in their credit risk  Financial Inclusion Strategy, management, and awareness raising activities for the integration of microfinance institutions in covering MSMEs, rural finance, Pakistan’s credit reporting framework. housing finance, payment systems, branchless banking, developed During FY 15-17 (ytd), IFC delivered an investment program of over US$300 million (including  Capacity of commercial and mobilization) in long term investments in Abraaj Capital, HBL, Bank Alfalah and NRSP and around US$1.1 microfinance banks, SMEs billion in GTFP rollover with 12 banks. enhanced IFC FIG Advisory include DFS, Housing finance, SME Banking, gender, rural/agri, engagements with FIs;  Credit information on MSME and SME VCF pilot with WB. IFC AS facilitated during FY15-16: borrowers available to all financial  No. of SME/Micro loans disbursed to women = 3168, No. of SME/Micro loans disbursed = institutions 147,516  No. of Agri/SME deposit accounts opened = 298,913, No. of women deposit accounts opened = 777,740 3.2 Reduced Vulnerability for Groups at Risk 36 Indicator: Basic cash transfers for BISP Mostly achieved: Basic Cash Transfer expanded to 5.43 million eligible beneficiaries under the beneficiaries expanded by 20 percent Poverty Scorecard; it is a 17.7% increase from the baseline. CCTs for primary education have been from baseline of 4.5 million rolled out in 32 districts beneficiaries in FY13; and Conditional Cash Transfers for primary education Ongoing: Wider application of the poverty survey data (National Socio-Economic Registry) with over 30 expanded to 25 districts from baseline organizations and 2 provinces using it for their programs. Punjab Government is using the data for a of 5 districts in FY13. program to support disabled persons. Milestones: BISP will be undertaking the NSER update and a beneficiaries’ recertification. The Punjab Government  Improved reliability of poverty and is planning to use the NSER data for piloting new social protection programs. Similarly, the KP will be shared prosperity data at national using data for their zakat based food support program. The Federal Government will be using it to and provincial level inform its energy reforms initiatives.  Wider application of the Safety Net System in the federal and at least 2 Programs and initiatives are on track. The provincial SP engagements are at initial stages. Developments provincial programs in Punjab are progressing well with setting up of the Social Protection Authority which will lead the  Enhanced investments in human work on social protection initiatives. There is a gap on the poverty and shared prosperity data at capital amongst the poor through national and provincial level, which will be addressed by a TA. complementary safety net graduation programs Off track: The enrollment indicator is Net Enrollment, not Gross. The GER (age 6-10) in 2011/12 for Indicator: Increase girl’s gross Girls is 85%, which has fallen to 82%. Overall the PSLM 2013/14 shows a decline in public school enrollment rates for primary enrolment, the team is waiting for the raw data to ascertain the reasons for decline. Punjab and Sindh education by 15 percent from 63 reform programs indicate an increase of 6-7% for girls over the project period. percent in FY12 baselines 3.3 Increased Resilience to Disasters in Targeted Regions On track with delays in Early Warning Systems: DRM plans have been operationalized in Balochistan, and underway in Punjab and Sindh. A national Hydromet project in pipeline to support early warning Indicator: Number of provinces with systems in provinces. operational Disaster Risk Management and Early Warning Systems increase  Multi-hazard risk assessments for Karachi, Lahore and Quetta completed. DRM Plan and SOPs from 0 in FY13 to 2 developed and operationalized for Balochistan. DRM Plans development is underway in Punjab and Sindh, and the State Disaster Management Authority. DCRIP and SRP could contribute to Milestones: protecting over 5 million vulnerable people from recurring natural disasters.  Multi-hazard risk assessments for  Beside institutional strengthening and technical expertise improvement at key DRM entities, major urban areas prepared recent Bank operations have included priority infrastructure investments for disaster  Provincial DRM plans and SOPs mitigation. Strengthening of hydromet and flood forecasting systems has been requested for a updated holistic and integrated forecasting and early warning intervention. 37 Results Area 4: Service Delivery 4.1 Improved Public Resources Management Indicator: Tax revenue ratio increased On track: Federal tax revenue ratio increased from 9.3% in FY12/13 (with corrected baseline) to from 9.6 in FY13 to 11.5 percent at 11.4% of GDP in FY15/16 and is expected at 11.8% of GDP for FY16/17. No special tax exemptions Federal level and no special have been issued and legal empowerment to issue them has been removed from FBR. Tax exemptions issued; improved collection from provinces has increased from 0.7% of GDP in FY12/13 to 1.0% in FY15/16. collection in targeted provinces Provincial Taxes Milestone:  Punjab: Urban Immovable Property Tax (UIPT) targets have been achieved with i) e-databases  Urban Immoveable Property Tax created for the six cities; and ii) updated property information and increased number of (UIPT) automation completed in 5 registered properties and UIPT receipts. 540,000 properties added to the registry and UIPT large cities of Punjab receipts increased by 98% in nominal terms by FY16. Digitization of urban properties in the remaining 30 districts is expected in FY17. Provincial revenue mobilization strategy and necessary reforms and establishment of the Punjab Tax Policy Unit were informed by ASAs. IFC supported PRA to establish the Large Tax Payer office.  Sindh: The Sindh Revenue Board (SRB) has automated its records and many business processes, including electronic invoicing and online payments. Receipts from Sales Tax on Services (STS) have more than doubled since FY11/12 (from PKR 25 bln in FY12 to PKR 61 bln in FY16- revised estimates). Under an ASA (DFID-TAGR), the Bank is providing analytics for tax policy and administration reforms in Sindh.  Balochistan and KP: Establishment of the KP and Balochistan Revenue Authorities which assumed responsibility for collecting the Sales Tax on Services (STS) in 2014 and 2015, respectively (KP’s STS collection has remained constant at PKR 8 bln in FY14 and FY16, whereas Balochistan’s GST collection has increased from PKR 1.8 bln in FY14 to PKR 2.2 bln in FY16– revised estimates). The forthcoming operations contain components dedicated to improving STS collection and overall revenue mobilization.  WBG is also working on an ASA on major tax and non-tax sources of Punjab and Sindh to develop a provincial revenue mobilization strategy, and policy and administrative reforms. Indicator: Non-wage recurrent Achieved: On aggregate, provinces had increased FY14/15 budget allocations to non-wage education expenditure by provinces in education and health spending by 27%. However, the provinces increased budget allocations to non-wage and health increased by 20 percent education and health spending by 22% on aggregate in FY15/16. from PKR 50 million in FY12. Milestone:  Notes on the subnational fiscal policy have been prepared that will feed into intra-government transfer policies. 38  Intra-government transfer policies adopted Data not available: The PEFA scores remain unchanged for the time being; the next provincial PEFAs are in the pipeline. PEFA Assessments of KP and Balochistan will be undertaken in FY16, and the Indicator: Quality and timeliness of federal, Sindh and Punjab in FY17. government accounting, auditing and reporting improves at Federal and Provincial level against PEFA scores of assessments undertaken in FY12 and FY13 (specifically PI-22 to PI-25) (P1-22 was rated D+ at Federal and B in Punjab in FY13; PI-24 and PI-25 were  E-procurement strategy has been approved by the federal PPRA Board, Punjab, and Sindh PPR rated C+ in Federal and Punjab in FY13) Board in principle. Federal, Punjab and KP have requested the Bank to implement e- procurement. Under Public Finance Management project, two major aspects will be Milestone: addressed (i) linkages between budgets and procurement plans, and (b) number of contracts  E-procurement strategy developed executed using e-procurement. and 25 percent procurement staff trained 4.2 Improved Access to Maternal and Child Health Services Achieved: PSLM 2014/15 reports Skilled Birth Attendant (SBA) rate has increased to 59% - Indicator: Percent births attended by consistent with administrative data which indicates SBA has risen to above 60%. In Punjab SBA has skilled health personnel increased increased to 64% (latest Multiple Indicator Cluster Survey “MICS” survey). from 52 percent in FY13 to 60 percent  Balochistan (TF) and Sindh (IDA): MDTF resources has been mobilized for multi-sectoral Milestones: nutrition interventions with WASH and Agriculture, with an initial focus on Sindh followed by  Provincial plans for scaling up Punjab. Additional Financing is under preparation for KP (TF). Strategic dialogue, awareness and nutrition interventions rolled out in advocacy efforts for improving nutrition with the governments continue. all provinces  PSLM 2014/15 indicates reduction in ‘open defecation by 2% in the last 2 years equating to 3.6  Change in behavior of 5 million million people. Under WSP TA, 3,912 villages converted to ‘open defecation free (ODF)’ status. people and 5,000 villages certified Additionally, the Sindh MSAN will convert 5,200 villages to ODF (2.3 million people). A WASH as ‘open defecation free’ reducing Poverty Diagnostic is ongoing to deepen sector knowledge and ensure that services for the the incidence of diseases bottom 40 percent are included. Indicator: Increased use of modern Achieved: PSLM 2013/14 reports an increase in Contraceptive Prevalence Rate (CPR) to 32% and more contraceptive methods from 26 so in Punjab where it has increased to 38% (consistent with latest MICS in Punjab). In KP there is percent in FY13 to 30 percent improvement with CPR to 28%. Milestone: 39  Provision of family planning  ASA- just in time note for Sindh and Punjab to develop population interventions as well as the products and services through all multi-sectoral nutrition plans of Government of Sindh have been prepared. public health outlets in Punjab Indicator: Increase child immunization On track with some delays: PSLM 2014/15 on full immunization in rural areas reports increase to from 54 percent in FY13 to 65 percent. 56% (up from 54% in FY 13). In Punjab, there is some improvements to 57% contributed by Punjab Health Sector Reform Project. Milestone:  Performance management and  Immunization coverage survey is planned under the National Immunization Support Project. coverage evaluation studies  The Child Wellness Package under the FATA TDP project has provided CCT support to almost institutionalized in Immunization 9,000 families with an uptake of immunization and growth monitoring services by 70% of Program families. A total 64,000 families will benefit under the project. 4.3 Increased School Enrollment and Adoption of Education Quality Off track: The PSLM 2014/15 data shows a small reduction in GER to 91%. Disaggregated data Assessment indicates there is no change in the GER for Punjab, Balochistan and KP, and a decrease in Sindh. Indicator: Gross enrollment rates for  664 low cost private schools in Sindh continue to be provided subsidy with more than 100,000 Primary (6-10 years) increased by at children enrolled in these remote rural schools. Similarly, 293,000 voucher beneficiaries in low least 10 percent from 68 percent cost private schools in Punjab. (M:72 percent; F:63 percent) in FY12 baselines Milestone:  Expansion of low-cost private schools in target provinces Indicator: Annual student On track: Student Achievement Test (SAT) was undertaken in Sindh - 178,905 grade-5 students and achievement tests for grades 5 and 8 108,743 grade-8 students were tested. Similarly, 2 rounds of DFID’s early grade reading assessment implemented in at least 3 provinces; have been conducted in Punjab. Average test scores on Urdu, English and Math showed an and show positive trend in learning improvement from 55% in 2014 to 58% in 2015. outcomes.  16,800 teachers in Sindh and 22,246 in Punjab recruited through merit and need based process. Milestones:  Sindh released PKR 4 bln in non-salary budget for all schools. In Punjab, school specific non-  Teacher recruitment against school salary budgets for all 36 districts have been transferred to school accounts on a quarterly basis. specific, needs-based teaching Recurrent non-salary expenditure as of April, 2015 was PKR 9 bln. In addition, a total demand posts implemented in target of PKR 14 bln to meet the non-salary budget needs of schools has been agreed by Gov. Punjab provinces for FY 2015/16.  School specific non-salary budgets 40  Punjab requires bolder reforms and targeted programs for the low performing districts and addressing fundamental issues by increasing numbers of classrooms and training teachers. Access and enrollment especially for out of school children in poor performing districts will be addressed through PESP III. 4.4 Adoption of Performance and On track: The number of Federal and Provincial Departments and Services with citizen feedback in Transparency Mechanisms in place have increased to over 26. selected institutions  Mechanisms are being developed for complaint monitoring and resolution, and grievance Indicator: Departments / Services with redress related to municipal services. A proposed Punjab Cities Program will roll out citizen citizen feedback in place increased by feedback mechanisms in medium and small cities. 30 percent (from 5 Departments and  The Punjab Public Management Reform Project supports the regular citizen feedback collection 13 Services with citizen feedback in and disclosure for 4 public services throughout Punjab. Under the Sindh Public Sector FY14) Management Reform Project, citizen feedback is being collected for 3 services. The Governance Support Project (GSP) has also supported the introduction of beneficiary feedback collection Indicator: Service delivery units, with for public service delivery in Balochistan (3 services) and KP (16 services). improved performance management Achieved: Six services have improved the performance management systems in Punjab and more systems, increased from 0 in FY13 to systems improvements are expected in other provinces. at least 4  4 Departments of the Government of Punjab (Health, School Education, Livestock, and Agriculture) are monitoring the delivery of six services in the field through ICT tools. Milestones:  In Sindh, ICT tools, including GIS mapping of infrastructure, are used to monitor the  ICT-based data collection, analysis, implementation progress. presentation and disclosure  Balochistan, KP, and FATA will introduce/expand similar service delivery monitoring facilities. mechanisms, set up in selected Right to Information (RTI) acts have been passed by KP and Punjab. The respective provincial provinces governments have also established Information Commissions under these acts. PPMRP supported 81  Improved performance government organizations in Punjab in regularly publishing information on their websites in accordance management framework with RTI Act. KP has also passed a Right to Public Services Act (RTPS) and established a Commission to developed for service delivery units monitor the compliance of 16 services with adopted service standards, and to resolve citizens’  Right to Information (RTI) Acts complaints. These were supported by the GSP, which has also supported other grievance redress passed and implementation mechanisms, notably the Ombudsman institutions of Balochistan and KP, e-citizen cell of the Peshawar mechanism established at national High Court, and the FATA Tribunal. and provincial levels 41 ANNEX 4: IDA/IBRD, IFC AND MIGA COMMITMENTS AND PLANNED PIPELINE FY15-17 Commitments Board Financing (USD m) Project Approval IDA IBRD TF Total 2015 PK: Sindh Agricultural Growth Project 76.4 76.4 2015 Enhanced Nutrition for Mothers and Children 36.2 36.2 2015 PK AF for Sindh Water Sector Improvement 138.0 138.0 2015 PK Sindh Public Sector Management Reform 50.0 50.0 2015 Punjab Skills Development 50.0 50.0 2015 PK-Sindh Barrages Improvement Phase I Project 188.0 188.0 2015 PK Sindh Irrigated Agri. Productivity Enhancement 187.0 187.0 2015 PK Fiscally Sustainable and Inclusive Growth DPCII 500.0 500.0 2015 Disaster Resilience Improvement 125.0 125.0 FY15 Total Approved 1350.6 0.0 0.0 1350.6 2016 FATA TDPs Emergency Recovery Project 75.0 75.0 2016 Power Sector Reform: Second Dev. Policy Credit 500.0 500.0 2016 WCAP AF 35.0 35.0 2016 Punjab Competitiveness PforR 100.0 100.0 2016 National Immunization Support Project 50.0 50.0 2016 Punjab Education III 300.0 300.0 2016 Fiscally Sustainable and Inclusive Growth DPC III 500.0 500.0 2016 Policy Based Guarantee - Growth DPC III 105.0 105.0 2016 Sindh Resilience/DRM - (IDA SUF) 100.0 100.0 2016 Balochistan Integrated Water Resource Mgmt. 200.0 200.0 2016 Governance Support Project for KP & FATA 12.7 12.7 2016 Balochistan Disaster Management Project (BDMP) 5.0 5.0 2016 Revitalizing Health Services in KP 10.2 10.2 2016 FATA Emergency Rural Roads Project (FATA ERRP) 16.0 16.0 FY16 Total Approved 1460.0 505.0 43.9 2008.9 14 2017 Tarbela 4 AF 390.0 390.0 2017 Punjab Tourism for Growth Project (IDA SUF) 50.0 50.0 2017 National Social Protection Project PforR (IDA SUF) 100.0 100.0 2017 DPC in Finance and Markets (partly IDA SUF) 301.6 301.0 2017 Governance and Policy Project for Balochistan 16.0 16.0 2017 Governance and Policy Project for the FATA 14.0 14.0 2017 FATA Rural Livelihoods and Community Infra 8.10 8.10 2017 Economic Revitalization of KP & FATA 19.0 19.0 2017 KP Southern area Development Project 4.0 4.0 FY17 Total Approved 451.0 390.0 61.1 902.1 Pipeline in FY17Q4 2017 Financial Inclusion (IDA SUF) 137.3 137.3 2017 Karachi Neighborhood Improvement (IDA SUF) 86.0 86.0 2017 AF PK Punjab Irrigated Agri Pro 130.0 130.0 2017 Sindh Enhancing Response to Stunting 61.70 61.70 14 Supplemented with AIIB co-financing of $300m 42 2017 Governance and Policy Project for KP 10.0 10.0 2017 Sindh Multi-sector Sanitation 5.0 5.0 2017 AF Mother and Child Nutrition KP 14.78 14.78 FY17 Q4 Total 285.0 130.0 29.78 444.78 FY18 Tentative Pipeline IDA & IBRD will be determined based on further dialogue with the Government FY Project IDA/IBRD Total Financing 2018 Transmission Modernization Project 425.0 2018 Peshawar-Torkham Expressway 125.015 2018 FATA TDP AF 114.0 2018 Punjab Strengthening Markets for Agri & Rural Transform (SMART) PforR 300.0 2018 PFM/Accountability to Support Service Delivery PforR 200.0 2018 Reforms for Accelerating Growth DPC 300.0 2018 Sindh Barrage Improvement Project AF 250.0 2018 Supporting Host Communities in Pakistan 200.0 2018 Punjab Cities Program PforR 200.0 2018 Pakistan Solar and Renewables Project16 150.0 2018 Pakistan Housing Finance 150.0 2018 Punjab Public Management Reform Program AF 110.0 2018 Tertiary Education Support Program II 200.0 2018 KP Hydro Project 200.0 FY18 TOTAL 2924 FY19-20 Potential Projects The list will be further refined in consultation with the Government Dasu AF Gas Restructuring and Infrastructure Project PforR Energy Efficiency Financing/Guarantee Sindh Social Protection Sindh Health Reforms (for lagging districts) Pakistan Hydromet system modernization Pakistan Fisheries Development and Export project Islamabad Water Supply project Regional Ecological Integrity and CC Provincial T&C Project (KP) PforR Capital markets and insurance development project Growth DPC 5 Pakistan Population project Energy Markets & Climate Change DPC/DPG Federal Revenue Mobilization PforR DDO Disaster Resilience Punjab Social Protection Sindh Education + Skills Punjab Revenue Mobilization PforR Sindh Jobs and Competitiveness PforR KP Urban Project KP Agriculture and Rural Development Project KP Own-source revenue Project 15 Total project cost is $375m, remaining $250m to be financed out of regional IDA 16 Total project cost is $300m, $100m from Green Climate Fund (GCF) 43 KP Tourism Project Karachi Water Supply and Sanitation Project Floating solar DISCO Efficiency improvement Transmission Phase 2 and Co-financing Thahkot and Pattan hydros Punjab Skills and employability Balochistan Education Sindh Agriculture and Rural Economy Transformation PforR 44 IFC Pakistan Investment Commitments (FY15-17) As of April 2017 Projects FY 15 FY 16 FY 17 FY 15 FY 16 FY 17 (YTD) (YTD) IFC commitment (US$ M) Mobilization (US$ M) Infrastructure & Natural Resources (Long Term Finance) Dawood TGL 29.5 44 Gulpur Hydro 50 154.5 Gul Ahmed 14.9 36.4 Metro Power 22.5 CSAIL 125 Elengy Terminal 14.5 20 30 Karot Hydro 100 PIBT II 6.7 6.2 Triconboston 66 172 Total- Infra 240.6 20 166 234.9 52.5 178.2 Financial Sector (Long Term Finance) Habib Bank Limited 161 64 Bank Alfalah 67 NRSP 0.79 Abraaj Capital 20 Total- Financial Sector 228.79 20 64 Manufacturing Agribusiness & Services (Long Term Finance) Numba Yaakiba 15 Coca Cola Pakistan 80 Friesland Campina 45 100 Total -MAS 15 45 180 Total Long Term (LT) IFC (US$M) 484.4 65 366 Total Mobilization (US$M) 298.9 52.5 178.2 Total LT (IFC+ Mobilization) (US$M) 783.3 117.5 544.2 Short Term (ST) (US$M) 434.6 424 283 GTFP (12 banks) 416 424 283 GTSF (Levis Int.) 18.6 - - TOTAL (LT+ Mob+ ST) 1,217.9 541.5 827.2 TOTAL- Cumulative (FY15-17) US$ 2,587 M IFC Advisory Portfolio PAKISTAN ADVISORY SERVICES PORTFOLIO FY17 WBG Budget Business Project Name Project Description Collaboration (US$ m) Area IFC is supporting Pakistan Microfinance Network to improve financial literacy of Pakistan Credit Y 0.7 F&M MFIs and build their capacity in credit reporting. WB policy reforms supported Bureau & MF the enactment and passing of Credit Bureau law 45 The Project is supporting HBL to expand its outreach in the rural/agri sector by HBL Rural Business N 0.5 conducting qualitative and quantitative market research to better understand Advisory customer needs and accordingly design products The Project supported NRSP to design a strategy and business plan to introduce NRSP Microfinance N 0.2 a new line of digital financial services that can deliver a full range of competitive Bank products through cost-effective and convenient alternate delivery channels United Bank FIG Limited SME The Project is supporting UBL to expand outreach to Small and Medium Banking & Supply N 0.6 Enterprises (SME) by enhancing its’ SME banking and supply chain financing Chain Financing services Advisory The Project is supporting Khushhali Bank to develop and pilot a micro-housing Khushhali Housing N 0.2 loan product that will facilitate the middle income households to obtain housing finance Meezan Bank SME The Project will support Meezan Bank to expand outreach to SMEs by enhancing and SCF Advisory N 0.5 its’ SME banking and supply chain financing services Project Pakistan Dairy The Project is supporting the capacity building of farmers in the supply chain of Sector N 1.2 MAS Nestle to improve milk supply and production Development The Project is supporting efforts to promote energy efficiency in Punjab through Punjab Energy Y 1.5 T&C energy conservation interventions focused on standards and labelling of energy efficient equipment The Project is supporting Government of Punjab to develop and implement a Punjab Investment Y 1.9 coherent provincial investment policy and improve the quality and transparency Climate of regulatory governance in Punjab Pakistan-Regional The Project objective is to improve trade logistics including regional integration Y 1.3 Trade Facilitation with focus on streamlining customs clearance procedures to increase trade flows MENA Renewable The Program supported individual companies in adopting more efficient Energy practices for production by undertaking cleaner production assessments and N 2.3 Development providing implementation support for resource-efficient practices and Program* technologies. The target sectors include agriculture, textile and food processing Lighting Pakistan was launched in 2015 to promote the development of a CAS- Energy sustainable, clean, and affordable commercial market for modern solar lighting Lighting Pakistan N 3.9 projects, targeting the off grid market. In aims to increase access to lighting and associated services for 1.5 million people by 2018. The Program will (i) advise specific companies on adopting and investing in MENA Regional resource efficient solutions; and (ii) work with groups of companies/stakeholders Resource Efficiency N 4.0 on market/sector level to address market barriers and facilitate replication of Program advanced solutions across the market. The advisory is geared at capacity building of value chain farmers of two Pakistan Sugar N 0.09 MAS sugarcane mills in Coca-Cola’s supply chain to improve sugarcane production and Project farmer livelihood Jamshoro Power IFC was appointed as the Lead Transaction Advisor to the Privatization Y 1.7 CAS- PPP Limited Commission (PC) for the privatization/restructuring of Jamshoro Power Company Limited (Generation Company) and Gujranwala Electric Power Gujranwala Power Company Limited (Distribution Company). The privatization program has been Distribution Y 1.9 scaled back due to political headwinds-hence these mandates are currently Company suspended The Corporate Governance project has been active in Pakistan since 2006 to Pakistan/Afghan CG N 1.1 ESG - CG improve the capacity building of board directors and senior managers and Project develop the market for CG products and services. Environmental and The Project will support to increase the share of new private sector investments Social Standards in N 2.0 ESG – E&S in the hydropower sector by promoting international E&S industry practices of the Hydropower standards in the Jhelum and Poonch Water basin Sector in Pakistan Total Total no. of Funds = *Projects operationally closed but yet to complete a PCR projects = 18 US$ 26.3 m 46 MIGA – Outstanding Exposure to Pakistan (as at April 2017) Management Effective Expiry Investor Project Business Host Gross Exposure Investor Country Sector Date Date Name Name Sector Country ($USD) Packages/ SE Stora Enso South Joint Venture - AGS 05/31/2013 05/30/2028 Manufacturing Pakistan Sweden 34,966,597 Asia Holdings AB working name Project Lizard Korea Water Star Hydro Korea, EEI 06/29/2012 06/28/2032 Resources Infrastructure Pakistan 148,500,000 Power Limited Republic of Corporation Daelim Industrial Gulpur Korea, EEI 06/30/2015 06/29/2030 Infrastructure Pakistan 14,880,105 Co., Ltd. Hydropower Republic of Lotte Engineering Gulpur Korea, EEI 06/30/2015 06/29/2030 & Construction Co. Infrastructure Pakistan 4,960,035 Hydropower Republic of Ltd. Korea South-East Gulpur Korea, EEI 06/30/2015 06/29/2030 Infrastructure Pakistan 62,827,110 Power Co., Ltd. Hydropower Republic of Habib Bank Habib Bank AG FINCAP 06/23/2011 06/22/2026 AG Zurich New Financial Pakistan Switzerland 79,661,439 Zurich Branches 6 Grand Total 345,795,286 Contracts 47 ANNEX 5: PROGRESS AGAINST CPS RESULTS FRAMEWORK Results Area 1: Energy 1. Reduced load shedding and cost of electricity production. The WBG interventions have contributed to reducing load shedding to 5.8 hours in FY16 from 8 hours in FY14. At the same time, the cost of generation has fallen to 11.2 cents from 12 cents/kWh in FY14 (not accounting for oil price changes). The WBG has facilitated 8152 MW of generation capacity, including significant mobilization of commercial and private capital led by IDA and IFC, that are expected to come on stream by 2020. The Bank initiated the unbundling of the gas sector and creation of a two-tier market to allow import of liquefied natural gas, and IFC invested in Pakistan’s first liquefied natural gas terminal. The WBG is supporting the diversification of the generation mix toward more renewables and continued improvement of the market. IFC is providing off-grid access to clean energy to 400,000 people through Lighting Pakistan. In the next phase, efforts will be focused on distribution, transmission, and renewable energy. 2. Improved financial sustainability of the electric power sector. Between FY14 and FY16, power sector subsidies have fallen to 0.7 percent of GDP from 1.8 percent, while bill collection has increased to 94.6 percent from 89.1 percent. A mechanism to maintain national uniform tariffs in DISCOs has been implemented. Circular debt continues to threaten the viability of the sector, risking the achievement of the outcomes indicator. Privatization of DISCOs and electricity generating companies has stalled, despite work done by the Bank on regulatory aspects and by IFC on transactions.17 The continued independence of the regulator, NEPRA, is an important prerequisite for sound governance and viability of the sector and would further strengthen market sentiments for DISCO privatization when the program recommences. Results Area 2: Private Sector Development 3. Improved business environment for private sector. Pakistan emerged as one of the top ten reformers in 2016 in Doing Business. The Distance to Frontier on Doing Business improved from 49.48 to 51.77 in FY16. The number of days to open a business has fallen to 18, the halfway point for this indicator. Other achievements are secure transactions and credit bureau laws; improvements in tax filing; and automation of land records in Karachi and Lahore, of cargo clearance procedures, and of business registration. Work is progressing on the remaining 10 Doing Business reforms at federal and provincial levels. 4. State-owned enterprise (SOE) restructuring and privatization program shows limited gains. While five18 privatization transactions were completed, they were primarily in the banking sector and thus had limited development impact. Other key results include setting up of seven Special Economic Zones. Further expansion of the WBG program in this area requires enhanced political space and commitment. The WBG will continue with a scaled down approach unless the pace picks up after the 2018 elections 5. Increased productivity in farms in selected irrigation schemes. The milestones are aligned with the CPS program scope, but not with the indicator, as the programs do not support improvement of yields in major crops. The indicator has now been revised. Over 2 million hectares of land have been provided with improved irrigation and drainage services in Sindh, Punjab, and Baluchistan, benefitting over 380,000 farmers. IFC supported the 17 IFC was engaged as the Financial Advisor for the restructuring and privatization of Gujranwala Distribution and Jamshoro Generation companies. 18 The strategic sale of the National Power Construction Corporation was undertaken, and four capital market transactions were Habib Bank, United Bank, Allied Bank, and Pakistan Petroleum. 48 acquisition of Engro Foods by Friesland Campina, the largest foreign direct investment inflows in FY17. It also invested in Coca-Cola for expanding and improving supply chain linkages. Going forward, WBG is ramping up agriculture and rural reforms in Punjab and KP, with a focus on creating markets for high-value crops. 6. Improved business skills for youth. The program has exceeded targets, with over 80,000 trained, including over 75,000 beneficiaries in Sindh and Punjab.19 IFC’s Business Edge and CG programs trained over 5000 individuals (16% women) and over 700 directors and managers. An integrated employability and skills framework for operations in Punjab is being implemented through multiple WBG interventions. 7. Improved trade tariff and ports/border logistics. The average statutory tariff rate decreased to 13.4 percent in FY16 from 14.4 percent, and the occupancy at Karachi port stands at 56 percent. The average waiting time at Wagah Border has been reduced to 3.5 hours from 6.5 hours in FY13, surpassing the target of 20 percent reduction to 5.2 hours. IFC facilitated the upgrading of the International Bulk Terminal and is developing a pipeline on oil refining logistics. Despite this, export performance has weakened over the past three years, suggesting that further efforts will be needed. Results Area 3: Inclusion 8. Increased financial inclusion for MSMEs and women. There has been strong progress on the indicator for number of bank accounts achieved; gender-disaggregation of information on accounts is ongoing.20 The National Financial Inclusion Strategy was developed through a RAS and aligned with the Universal Financial Access 2020 goals. Microloans to over 600,000 beneficiaries and the opening of 100,000 MSME deposit accounts (three- quarters for women) were facilitated. IFC invested in two large banks with sizable SME portfolios (HBL and Bank Alfalah) and supported the trade activities of businesses including MSMEs through short-term trade finance facility with 12 local banks. The WBG is supporting the public and private sectors in digital financial, gender, housing, and agriculture financing, SME banking, and sustainable energy and supply chain financing. 9. Reduced vulnerability for groups at risk. Basic cash transfers have expanded to 5.43 million beneficiaries (women-headed households) under the Benazir Income Support Program (BISP). Conditional cash transfers benefiting 1.3 million primary school children have been rolled out in 32 districts against the original target of 25. There has also been uptake of poverty survey data at both organizational and provincial levels for targeted service delivery. Progress on girls’ enrollment is off track, as the net enrollment rate at the primary level has fallen by a percentage point to 62 percent. A multi-GP team is examining causes and the way forward, looking at supply- and demand-side constraints and at population growth and poverty, with a view to realigning WBG support. 10. Increased resilience to disasters in targeted regions. Disaster risk management plans have been operationalized for Balochistan, and are under preparation in Sindh and Punjab. Multi-hazard risk assessments for three major urban areas have been completed, and a federal-level National Risk Information Platform has been established and operationalized. Progress has been limited in the operationalization of early warning systems, which are projected for completion in the remaining period. A PPP-led hydromet effort is under consideration. Results Area 4: Service Delivery 11. Improved public resource management. There has been good progress. The federal tax to GDP revenue ratio has increased from 9.3 percent of GDP in FY13 to 11.4 percent in FY16 and is budgeted at 11.8 percent for FY17. Provincial tax collections have increased slightly from 0.7 percent of GDP to 1.0 percent through support of tax 19 38% find employment after training in Sindh. Punjab data will be available in 2018. 20 The indicator does not measure unique accounts because of lack of data. 49 policy and administrative reforms. Provinces have increased their budget allocations to non-wage recurrent education and health expenditures by 22 percent in FY16 against the target of 20 percent. The quality and timeliness of government accounting, auditing, and reporting at federal and provincial levels against PEFA scores will be measured in the coming fiscal years. 12. Improved access to maternal and child health services. There has been good progress on all three indicators. In Punjab, 59 percent of births are attended by a skilled birth attendant, against the target of 60 percent, according to latest Multiple Indicator Cluster Survey. The Pakistan Social and Living Standards Measurement Survey shows that the contraceptive prevalence rate has increased to 32 percent, against the target of 30 percent, and that full immunization in rural areas has increased by two percentage points to 56 percent. Health and multisectoral nutrition interventions are expanded in all provinces, and a new indicator has been added. 13. Increased school enrollment and adoption of education quality assessment (off track). Primary gross and net enrollment rates have decreased by one percentage point since 2013. Multiple factors may have contributed to this stagnation in enrollment outcomes, including poor school infrastructure, lack of learning resources, and poor quality of teaching, in addition to demand-side constraints. The reliability of household survey data will be reviewed over the remaining period of the CPS to determine the validity of the enrollment outcomes. The PLR proposes the use of the more predictable school participation rate21 instead of net enrollment to track enrollment outcomes in the country. Student achievement tests continue to be administered annually in both Sindh and Punjab. 14. Adoption of performance and transparency mechanisms in selected institutions. Grievance redress mechanisms for municipal services are being implemented by city district governments in all provinces. Right to Information Acts have been passed and corresponding implementing mechanisms established in KP, Sindh, and Punjab. The program also supports the development and improvement of 18 service delivery units and 5 cities in Punjab; and management information systems have been developed in Punjab and Sindh for compliance with provincial procurement regulations. The Land Records Management Information System has contributed to ease of doing business in Lahore. A complaints case management system developed under the Social Safety Net project has had almost 3 million cases filed and resolved by July 2016. Similar mechanisms will continue to be mainstreamed across the portfolio. Cross-cutting Areas 15. Collaboration has been deepened across global practices and client institutions to address the cross-cutting themes that influence results and provide the foundation for the IDA18 special themes: 21 School participation rate is defined as the share of children enrolled in school within a specific age cohort. It includes late entrants into the school system (a common issue in Pakistan). Net enrollment rate takes into consideration whether the right child is enrolled in the “right” grade for his/her age. School participation rate is better suited to tracking out-of-school children and allows for better forecasting. 50 a) The Country Gender Action Brief was launched along with the Gender and Social Inclusion Platform to operationalize the WBG Gender Strategy. The Platform, focusing on women’s economic empowerment, provides operational and analytical support (including client capacity building) for project preparation and supervision. In FY15-17, 60 percent of delivered projects were gender informed. Additionally, joint initiatives under T&C through complementary instrument mix (AS/PforR) have incorporated gender specific Disbursement Linked Indictors to improve business regime and working conditions for women entrepreneurs/employees in Punjab. b) Projects are informed by climate change considerations; with estimated climate co-benefits of 30 percent. Energy operations and investments continue to focus on a more sustainable generation mix. A technical assistance project is supporting implementation of the Nationally Determined Contribution, and a climate change law was recently passed. Operations to build resilience are under preparation or implementation, particularly to address serious issues of water stress, focusing on urban, agriculture, water, fisheries, forestry and financial sectors. c) IDA and trust fund operations are helping improve peace- and state-building in KP, FATA and Balochistan. The MDTF has benefited 5.7 million people through operations on jobs, livelihoods, and governance. An operation supporting temporarily displaced persons following military operations in FATA is being considered for additional support. IDA and upcoming MDTF operations in KP, FATA, and Balochistan continue to be informed by a fragility/stability lens. d) Gains in regional connectivity remain limited by the geopolitics of South Asia. Two investment operations, CASA-1000 and the Central Asia Gateway (under preparation), continue to make progress, albeit slowly. The Pakistan Trade and Investment Policy Trust Fund aims to support capacity for regional connectivity. Figure 2: Results in KP, FATA and Balochistan: Focus of FCV Operations 51