- World Bank’s projections on Pakistan’s economy
After recent dismal assessments by the United Nations and Asian Development Bank, the WB too has predicted stormy weather ahead for the already tossed about Pakistani economy, with not a port in sight until 2021. These negative fiscal findings should not come as a sudden and total surprise, as dire warnings were sounded in the past by international financial institutions with ever increasing frequency and note of desperation. Unfortunately, successive governments neither paid heed to the free advice, nor made other than feeble attempts to rectify the red blips on the macroeconomic map. Runaway extravagance, reckless borrowing, lack of political will in undertaking arduous, politically unpopular reforms, have mired Pakistan in its present sorry fiscal mess.
The latest WB report on South Asia cautions about Pakistan’s declining GDP growth over next two financial years, to 3.4 and 2.7 per cent, before ‘recovering’ to 4 per cent in FY21 (but conditions apply: stable oil prices and secure business environment, among others measures). The public debt in current fiscal year would widen to 82.3 per cent of the total size of the national economy, while budget deficit will be a cavernous Rs2.6 trillion. Inflation will jump from 7.1 per cent in FY19 to backbreaking 13.5 per cent in FY20, agriculture and industry will wilt, and with low tax base, currency depreciation and high interest rates strangling growth, the signposts point towards possible debt default. South Asia may be the world’s fastest growing economic region, despite its overall exports being only half of its imports, but Pakistan languishes at the bottom rung, just above war-devastated Afghanistan. A dubious distinction, indeed! The bitter pill is sweetened somewhat by hopeful projections of higher exports and inward remittances, and a turn for the better after the two-year period of desired policy, structural and regulatory adjustment, with greater emphasis on value-added manufacturing and investment. To the common man, the chief swallower of above bitter pill (especially in IMF ‘bailouts’) the government’s poverty reduction Ehsaas Programme will provide much-needed social safety nets. The various antidotes to our economic ills are well known, but austerity, economic self-abnegation, shunning excessive consumerism and encouraging savings should also be added to the list.