ISLAMABAD: World Bank’s (WB) Regional Director for South Asia, Mathew Verghis, on Friday raised concern about Pakistan’s economic model, saying that it was no longer sustainable and in dire need of urgent reforms.
Addressing a ceremony in Islamabad, the WB regional director said that the fiscal deficit and current account deficit caused by high expenditures were leading to unsustainable levels of debt.
He also highlighted the multifaceted challenges Pakistan faces – from economic struggles to a silent human capital crisis. “Pakistan’s economic model is no longer sustainable and in need of urgent reforms,” he noted.
Verghis regretted that the country was spending more than its income, pointing out that it is ranked lowest in the region in terms of gross domestic product (GDP).
He also warned that the risks of environmental catastrophes were increasing for Pakistan, saying that people were directly affected by the floods.
The World Bank representative further said that all stakeholders – governmental, non-governmental and as well as foreign donors in Pakistan – need to coordinate for reform and bright future for Pakistan.
The WB regional director also said that the country’s economic recovery was only possible if it brought urgent reforms. “The current economic policies cannot lead to stability”, he said, adding that challenges for the country’s economy continue to grow.
“Pakistan can achieve growth and be on a growth trajectory but requires a modified and reformed system as its current economic system lacks stability,” he concluded.
Recently, Asian Development Bank (ADB) issued an economic outlook report in Asia, predicting that Pakistan’s gross domestic product (GDP) growth is projected to recover modestly to 1.9% in fiscal year 2023-24 from 0.3% in FY2023.
According to the report, inflation in Pakistan will decrease from 29 percent to 25 percent in the ongoing fiscal year as the country’s economic confidence is expected to increase from the general elections in 2023-24.
However, high inflationary pressure will continue due to an increase in energy prices and the falling value of the rupee, the report highlighted.
“Pakistan’s economic prospects are closely tied to the steadfast and consistent implementation of policy reforms to stabilize the economy and rebuild fiscal and external buffers,” said ADB Country Director for Pakistan Yong Ye.
ADB Country Director said: “Increase in global prices and slow economic growth is also a threat to Pakistani economy along with economic stability depends on sustained policy reforms.”