Year:        2000-2002
Client:      European Commission and the Government of Pakistan
Country:   Pakistan
Value TA:  ? 5.500.000

The European Commission granted Euro 65.5 million as budget-support and Euro 5.5 million as TA-support to the basic-health and elementary-education sectors of Pakistan. EC funds were to be released through an international Donors consortium (WB, ADB, DFID, NL and EC) over a period of five years (1998-2002). Achievement of an agreed performance level would result in release of budget support. Performance was measured in terms of financial priority, i.e. social sector budget allocations and actual expenditures, and through process indicators and social sector output and impact indicators. The EC Programme Coordinator (presently Especs staff) was engaged for 3 years in a dialogue with the Government of Pakistan (GoP) and contributed to, and reported on social sector performance to the EC Delegation. In 2001 regional imbalances occurred and remaining SAP-II funds were released in an accelerated manner to maintain the fragile momentum of social sector investments in Pakistan.  SAPP-II showed that:

• the link of increased social sector budgets and improved sector performance was weak and impeded by a limited capacity of social sector departments to deliver, 
• capacity-building TA aimed at increased access, delivery and improved quality of social sector services, but a lack of understanding how to provide TA and use innovative Public Private Partnership (PPP), contributed to low delivery and quality of social services. The EC TA was well appreciated and deployed at provincial department level, where niche-areas and TA interventions were identified by the stakeholders.
• the management of the Social-Sector-wide Approach (SWAP) and the sector budget-support was weak, with weak ownership by the GoP. These weaknesses contributed to the low social sector performance.
• the low performance could persist because the Donor/GoP dialogue did not focus on sector output and outcome, but was pre-occupied with input or micro-management issues. A clear and shared institutional- and organisational capacity-development concept is essential to realize an effective donors dialogue, a result and outcome-oriented focus, and a successful SWAP.
• another important lesson ? especially for the European Commission ? is that loans and grants should not be treated equally. For loans the desire to disburse seems to be higher than for grants. The challenge for the EC grant-donor is to profile its policies and demarcate its position while being part of a balanced and integrated multi-donors approach.