56103
                                     ISLAMIC REPUBLIC OF PAKISTAN:

                                   COUNTRY PARTNERSHIP STRATEGY

                                          CHAIRMAN'S SUMMING UP

                                         Meeting of the Executive Directors

                                                      July 8, 2010

        The Executive Directors discussed the Country Partnership Strategy (CPS) for Pakistan. They
noted the CPS was well aligned with the Government's Poverty Reduction Strategy Paper (PRSP).

        Directors commended the Government of Pakistan for restoring macroeconomic stability amid
global economic uncertainties and a highly challenging security environment. They recognized the
Government for making significant progress on its ambitious reform program, highlighting
implementation of difficult reform measures to raise electricity tariffs and the introduction of an
automatic adjustment of fuel prices. Directors underlined that serious challenges and risks remained and
urged the Government to continue on the path of sound macroeconomic management and, in particular,
moving forward with the implementation of the Value Added Tax (V AT) in fiscal year 2011.

        Directors expressed broad support for the CPS and encouraged the Bank to continue pursuing an
active dialogue with the Government. The Chair representing Pakistan confirmed that his Government
concurred with the strategy, but raised some concerns about insufficient recognition of government's
recent achievements and about the tone of the Bank's assessment of macroeconomic, political and
security issues; and welcomed the Bank's recognition of the Government's achievements in the opening
statement. A new version of the CPS will include a few changes which will take care of these concerns. l

         Some Directors reiterated the need for realism regarding CPS targets and appropriate recognition
of risks. Many Directors endorsed the strategy's main priorities and emphasized the need to build local
capacity, address revenue mobilization, governance issues, energy supply and conflict. Some questions
were also raised about the order of priorities in the CPS.

         Directors endorsed the Bank's proposed engagement in the western border areas and welcomed
the Multi Donor Trust Fund (MDTF) as a vehicle to mobilize donor support for a comprehensive
reconstruction and development strategy in conflict-affected areas of the country. They also welcomed
the CPS's core program of support to improve educational and health outcomes, and reinforce safety net
systems. Directors noted that gender issues were mainstreamed in the strategy, particularly related to
girls' school enrollment and support to women-headed households under the Benazir Income Support
Program (BISP).

         Directors noted that the International Finance Corporation (IFC) exceeded investment financing
targets under the previous CAS period, and expressed support for IFC' s planned investment in financial
markets, agribusiness, health, education, and energy, particularly renewables.

       Finally, Directors encouraged the Bank to work closely with authorities to strengthen
mechanisms for donor coordination. Directors urged the Bank to assume greater leadership in
coordination efforts in Pakistan, and pay particular attention to needs in the energy sector. In this regard,
some Directors pointed to the importance of Bank's investment in agriculture, highways and coal.



1   The final revised CPS was circulated as R2010-016614[IDAIR2010-022514; IFCIR2010-0232j/4