Pakistan’s economy on edge of precipice, warns World Bank – Business – DAWN.COM
The World Bank has issued a stark warning to Pakistan ahead of its general elections, emphasizing that critical decisions for the nation’s future must be made internally. While international lenders and development partners can provide advice and some financing, Pakistan’s leaders must make hard choices and course corrections themselves. The country director for the World Bank in Pakistan, Najy Banhassine, highlighted the influence of strong vested interests, including the military, political, and business leaders, on policy decisions.
Pakistan faces significant economic challenges, including soaring inflation, rising electricity prices, severe climate shocks, and inadequate public resources for development and climate adaptation. These issues are compounded by a ‘silent’ human capital crisis characterized by high child stunting rates, poor learning outcomes, and elevated child mortality. The World Bank expressed concern that poverty reduction progress achieved until 2018 has been reversed.
Furthermore, Pakistan’s average real per capita growth rate has been only 1.7 percent between 2000 and 2020, significantly lower than that of comparable countries. Human development outcomes in Pakistan lag behind South Asia, with girls and women disproportionately affected. To address these issues, the World Bank recommended shifting policies towards coordinated, efficient, and well-funded service delivery, prioritizing vulnerable populations and investing in climate adaptation.
The country’s currency, the Pakistani Rupee (PKR), has reached record lows against the US dollar due to easing import restrictions and a USD 3 billion International Monetary Fund (IMF) loan program. The caretaker government, currently in power, is dealing with political tension, historic inflation, and high interest rates. Pakistan’s economic crisis, characterized by inflation and dwindling foreign reserves, has prompted austerity measures, including additional taxes and expenditure cuts. Analysts warn that without the IMF deal, Pakistan could face a debt default.
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