World Bank President Sanjay Singh Banga, on a visit to Pakistan last week to review the Country Framework Agreement signed last year, gave a hint that Washington consensus institutions might relent, and allow pro-growth policies to be put in place. Mr Banga said that 30 million jobs must be created in the next decade if Pakistan is to accommodate the youth bulge and turn it into an economic dividend. It was not rocket science to realize that the kind of job creation he spoke of could not be possible without growth, and substantial growth at that.
Mr Banga was only stating the obvious when he said that job creation would be a primary goal, not a secondary policy goal.
It may also be noted that State Bank of Pakistan Governor Jameel Ahmad said that the SBP is now focused on economic growth. The last two meetings of the Monetary Policy Committee did not cut interest rates, mentioning as a reason healthy growth. Clearly, the SBP thinks it is doing something right. However, it appears to have realized that the growth which will result will not create enough jobs to accommodate the youth bulge. Mr Banga noted that infrastructure, primary healthcare, tourism and small-scale agriculture were all labour-intensive, and thus needed capital and support so as to set up job-creating businesses. The alternative has already started taking place. Migration is how young people are solving the lack of jobs at home, with 4000 doctors leaving in 2025, the highest outflow on record. While those who migrate are lost to the country, at least they are the problem of the country they move to. Those who remain behind, jobless, probably futureless, are going to cause unrest, destabilizing society.
This may seem like the expression of the fears of the West, which is faced by a rising tide of migrants from the Third World. However, it is also a danger for Pakistan. If there is insufficient economic growth, the necessary jobs will not be created. It should also be noted that Mr Banga did not mentio any export industry. This probably reflects a realization that any economic plan based on demand from abroad is unwise. More important than the government taking his words to heart, it is the IMF which needs to shift its position.
